Tyler always knew he was an entrepreneur, wasn’t interested in college, so he took a car salesman job. As he was doing well there, he still wasn’t doing something to utilize his entrepreneurial skills. Enter real estate. He took a REI course and never looked back, purchasing a $1.5 million multifamily property right off the jump. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!

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TRANSCRIPTION

Joe Fairless: Best Ever listeners, how are you doing? Welcome to the best real estate investing advice ever show. I’m Joe Fairless, and this is the world’s longest-running daily real estate investing podcast. We only talk about the best advice ever, we don’t get into any of that fluffy stuff. With us today, Tyler Hassman. How are you doing, Tyler?

Tyler Hassman: I’m doing great, Joe. Thanks for having me.

Joe Fairless: Yeah, my pleasure. Nice to have you on the show. A little bit about Tyler – he is a co-founder and president of M&H Real Estate Investments Inc. He built a 12 million dollar real estate portfolio with over 86 units by the age of 21 years old. Based in Regina, Saskatchewan. With that being said, Tyler, do you wanna give the Best Ever listeners a little bit more about your background and your current focus?

Tyler Hassman: Yeah, absolutely. Thank you for the intro, Joe. Right now I’m still 21, turning 22 in a week here, so… Obviously, super-exciting. But yeah, I’ve always been an entrepreneur, I’ve always wanted more to life, ever since I was young, I’ve always wanted that. I was super-smart growing up, skipped grade six, and then high school hit, grade nine, and I just couldn’t focus in school. I was like “I don’t wanna learn any of this. I just wanna make money, I wanna run businesses.” I don’t know, this stuff I was learning just felt like it didn’t apply to what I wanted to do.

In the high schools in a small town like Saskatchewan there was no entrepreneurship or business classes; it was just the typical math, science, all this and that, so I started up a couple T-shirt businesses in high school, little side hustles, meanwhile I just let my grades slip, didn’t at all pay attention, barely graduated high school.

So I went from being the role model student, skipping a grade in elementary, and then in high school I was the story of “Wow, this kid threw everything away.” But in my mind, I knew I was gonna hit success, because I’m at home reading “Think and Grow Rich”, reading “Rich dad, poor dad”, studying all this entrepreneurship and business stuff, but I wasn’t focusing on school. It was a tough time around people understanding what I was doing, but shortly after high school I didn’t get into university, I didn’t wanna go either, or college, and I went into selling cars, because I just wanted to have a job selling stuff, because I love selling stuff. I’m a people person.

I got hired at Mercedes Benz here in Regina, three months out of high school, and I was a lot boy, so I ran cars around, got them washed up for the sales guys, but I always knew I wanted to sell cars. I wanted to be the car salesman at the time.

So I studied the cars, and then they fired one sales guy two months in when I was working there, and I was like “Put me in, please.” Super-ambitious. I had this entrepreneurial burning desire in front of me, so I didn’t care about my age, or anything. I just said, “Guys, put me in.”

So they put me in, and two years went by and I was learning so much in car sales. So much about dealing with people, presenting myself right, and really getting past that age barrier. We had a lot of clients that came in spending a lot of money, and they would see me and be like “I don’t wanna deal with this little teenager.”

The reason why I’m telling this is because then I really got mature very quick when I worked there. Then when I was sitting in on one night and I was like — I always wanted to do business, right? So even though I was selling cars, doing good, I’m like “I’m an entrepreneur. I need to do business.” I was sick and tired of me starting up these little companies, like a T-shirt company here and there, little stuff like that; I’m like “I wanna do a big boy business.”

I was on Google and I was just googling ways to get rich, and sure enough, there’s a lot of funny things that popped up, but sure enough the biggest one was real estate. Because you know, you’d find these guys that create apps, and internet stuff, and they’re billionaires, and this and that, but then real estate – you see that all over. All the big, wealthy, big guys, and all the rich people I know own real estate. So I was like “You know what, I’m gonna do real estate.” So that’s actually how I decided to get into real estate. It was just from a Google search and me wanting to get rich.

Now my morals have changed, obviously, but at the time that’s what that was. Then I was like “Hey, well, I’m broke. I don’t even have a credit card, I’ve never had a loan in my name, and I don’t know what I’m doing.” I was driving around, looking for a hood house, or like a ghetto house, like a really bad house in a bad area, because all I could try and afford, like a couple thousand dollar down payment.

Then what happened was I was like you know what, I’m wasting my time. I was getting nowhere, because I really didn’t know what I was doing. Six months went by, a year went by, still selling cars, and I’m like “I’m not getting any traction. When am I gonna buy my first property?”

I started going to networking events, putting myself out there, and then found out about real estate investing courses. I took a real estate investing course about purchasing multifamily buildings, and I just learned how to do it. Once I learned how to do it, I was like “This isn’t so difficult.”

So then I went out, found a deal, and I had a business partner as well, on M&H, too. So I had a business partner (Bailey) as well, and we went out, we found a deal, and then we ended up raising the money, closing it, and then we got our first building. Then I was just turning eighteen when that happened, still selling cars… So that’s the thing – we were looking at hood houses, then we got educated, and then went and bought a 1.5 million dollar brand new 12-unit apartment building within six months. From there, it was a big ripple effect. People saw what we were doing, and then there was three more buildings that came for sale, we closed on them, then two more, and it was just a ripple effect. That ripple effect is continuing to go to this day.

That was kind of an extended story, but [unintelligible [00:07:22].14] more insights of my start, too. Currently, actually — gotta end it off on currently… Currently we’re always growing our portfolio and raising capital here in Saskatchewan, Canada. I also partnered with another business partner, I have another company, AHDC International. Our focus there is on boutique hotel resorts down in Costa Rica, and we’re also looking at — at the end of this month I’ll be going down to Phoenix, as we’re gonna get into some short-term rentals down there, and move down South and just do some stuff down there… Tax deeds, tax liens, wholesaling, all sorts of things. I’m really branching out now.

Joe Fairless: Whose course did you take?

Tyler Hassman: There’s a local lady up here in Canada. It’s “90 days to 5k” is what it’s called. It’s a local one up here. It was a great experience to learn it… Because I’ve taken big course by big names, and the issue was with me — I was attracted to wholesaling at the start, because it’s always, like, quick money.

Joe Fairless: Was that the “90 days to 5k” course, the wholesaling?

Tyler Hassman: No, that’s apartment courses. And then I was looking at wholesaling courses, and they were all down in Texas. One was by Cody Sperber and Josh Altman, “Clever Investor”, but then what I realized is I spent the money on the course, I took the course, and then what happened was I then realized in Canada wholesaling is not a big thing, because the banks don’t foreclose so quick. There’s no auctions where you can go pick up houses for dirt cheap.

So I was like, “No…! I wasted $2,000”, which was a lot of money for me at the time, and I just realized I couldn’t do that at the time… So it was really good learning from a local group, and I also learned a lot from being with local, you know what I mean, Joe? You can learn as much as you can from these courses, but the most you’ll learn is from people in your network, and people that are doing it in your area, because there’s certain things here in Saskatchewan that are going on that are way different than, say, down in California.

Joe Fairless: For example?

Tyler Hassman: For multifamily I would say it’s pretty generic. For multifamily and what I do when it comes down to joint venture partnerships, I would say it’s similar all around North America, at least; I haven’t looked into worldwide, let’s put it that way. But for North America, the system I use for joint venture partnership, that’s common everywhere.

But certain things when it comes down to — whether it’s the laws of the province up here, or down in the States… I do know that there has been times where down in the States the prices — you can’t even justify some of the prices on some of these places, depending on the area… So really when it comes down to it, my biggest thing is wholesaling here in Canada is much different than down in the States, for that reason – the banks don’t just foreclose real quick. But as for multifamily, I would say it’s very similar, but there’s certain little things about knowing the right people in a certain area, to get the best deals and make stuff happen… Because if you’re dealing with — the system I do for multifamily, like I was saying, to sum it up, it’s universal, but I really stress people to get really tight with their own network in their own area, because there’s certain things in the course that you’re not gonna learn, such as finding the right people and getting off-market deals. You need to be a part of your local community, and you can’t get that in any courses.

Joe Fairless: Let’s talk about the second deal that you did, and we’ll get into details there just to bring this to life a little bit. So the first deal, you said, it was a 1.5 million dollar apartment building, and you raised the money for it… What was the second deal?

Tyler Hassman: The second deal was the exact same building, but there was two of them, two 12-units. That deal there – it was interesting, because a lot of people saw what me and my business partner did, and we put a lot of work into putting that deal together, because it was a brand new building and it didn’t have any tenants in it. So we had to really get tenants in there, and it was a struggle at the start… But a lot of people saw what we did, and it turned really great profits and returns for our investors… So immediately when there was another two buildings from the same builder that came up in that area, there was actually people in our network locally that actually hopped on those ones first, the next two.

Joe Fairless: And when you bought the first one, for 1.5, how long until you bought the second one, which was two 12-units?

Tyler Hassman: Four months.

Joe Fairless: Okay, got it.

Tyler Hassman: We closed on the mortgage, we were getting people into that building, and it was really busy; that’s why we weren’t really looking at those other 12-units that were for sale… Because we were super time-consumed. But in the meantime, another person in our group went and got those ones under contract, and then they started raising money on it, and then they realized, “Holy cow, we need Tyler and Bailey to come and do the work, so that they can bring it up to where it should be and bring it up to the standards, because they’ve done it before…”

Joe Fairless: What work were you doing exactly?

Tyler Hassman: It was the management. The whole deal management and property management as well.

Joe Fairless: Okay.

Tyler Hassman: Because here in Saskatchewan these buildings are in small communities, but in the area there’s one of the world’s largest underground potash mine.

Joe Fairless: World’s largest underground what?

Tyler Hassman: Mine.

Joe Fairless: Mine, got it.

Tyler Hassman: Yeah, they mine potash, so there’s thousands of workers in that area… But you need to be in that area, you need to get some furnished units, you need to really be on top of it, and the thing is there’s no property management companies in these areas. You can hire a local maintenance guy, and that’s what we do – we have a local maintenance guy that goes in and out, but he’s not the type of guy that’s gonna be doing good viewings, or taking calls, assigning leases… So that was why they needed us to come on, because they needed somebody out there, feet on the ground.

Joe Fairless: So you took a general partnership ownership in the deal, in exchange for property management, or were you a third-party property management company.

Tyler Hassman: No, we got direct shares. We got direct shares, because we were also the deal management. We dealt with setting up the bank accounts, the corporation, getting the mortgage… We ended up doing all that, and then the other partners were the money partners. They went and found investors.

So that’s the thing, because that was part of our deal – we were like “You know what, we don’t want to just property-manage it, we want ownership, so what else do you want us to do?” and they were like “Well, since you want ownership, you guys will have to manage the whole deal, and of course, the property.”

Joe Fairless: Okay. And then the first deal, did you do all of it, or did you two break it up and have other partners on that one?

Tyler Hassman: We did all of it. We had, of course, our capital partners where we raised the money; other than that, it was just us, and then we actually — if there’s any other young viewers out there thinking that it’s because you don’t have any credit, it’s your first deal, you can’t get a mortgage, this and that… That’s total lies, because on that deal – it was very interesting, Joe… We got the investors’ money, and we go to get the mortgage; and the mortgage company comes back and they’re like “Yeah, the net worth is there from your investors, everything is good, but we’re not gonna lend you any money because there’s no experience. You’re asking for a mortgage on a 1.5 million dollar property, but you guys have never done real estate before, and your investors haven’t, either. We don’t care that they have money; the big thing is that there’s no experience.”

So we actually then dug into our network and called somebody up that owned a bunch of real estate, and we were like “Hey, we’ll give you 10%. Sign on for the mortgage and sign onto the deal.” So we ended up doing that, cutting some shares, and then ended up getting the mortgage. Sometimes you’ve gotta be very creative to make deals happen.

Joe Fairless: How many units is the 1.5 million dollar property?

Tyler Hassman: 12 units.

Joe Fairless: 12 units, okay. Usually, when it’s a brand new building – did I hear that correctly, that it’s brand new?

Tyler Hassman: Yeah.

Joe Fairless: Okay. Usually, those aren’t value-add opportunities, unless a developer is in trouble and needs to get out… So what was the story for how this was a value-add deal?

Tyler Hassman: Yes… So the builders built these to sell as condos, and in this market, Joe, everybody was like “You can’t sell condos in this market”, in this certain region, because it’s a rental region. You’ve got all the mine workers – they’re not buying, they’re renting, because they only work there for two weeks, and they go home for a week, and they come back for two weeks…

They tried to build them and sell them as condos, had no luck at that, and then they were on the verge of bankruptcy, so they really needed to get rid of these buildings. Then our value-add was simply getting the tenants in there and turning these condos – what they were branded as – into rentals.

Joe Fairless: How did you hear about it?

Tyler Hassman: We heard about it from a networking event. At these networking events we would tell everybody we’re looking for a building, because we were hungry for a building… And then there was somebody at the event that said “You know what, I actually found out about a guy that has access to these buildings, but his company is about to go bankrupt.” I’m like, “What?” So we got in contact with that guy, who actually was helping out this company – he was gonna list the building actually, and then we called him ahead of time and said “We’re looking, you don’t have to list them”, and yeah, we ended up getting connected that way. So it was through networking.

Joe Fairless: How much equity did you need to bring to the deal?

Tyler Hassman: We needed to bring $400,000. Or are you asking for the cash we needed to invest in there?

Joe Fairless: Yes, exactly.

Tyler Hassman: Yeah, it was about $240,000 or something like that, and then of course we had extra money for closing costs, reserve funds, and all that… But the investment capital we brought was $400,000.

Joe Fairless: Okay, perfect. And how many investors does that make up?

Tyler Hassman: That one was just one investor.

Joe Fairless: One investor. And how did you know that investor?

Tyler Hassman: That investor – it was a connection from my business partner Bailey. It was a connection from him, and it was really tough on that particular deal, because at the time when we first met, the guy that had access to these buildings – the first building – we somewhat knew what we were doing, but then all of a sudden we’re like “Yeah, we wanna go take a look, we’re super-interested, we wanna get it under contract”, and he said “Okay, well how much money have you guys got for deposit?” [unintelligible [00:16:56].22] and then we looked at each other, and then in the back of my mind I’m like — I had no money at this time. I spent my money stupidly with the money I made from car sales, so I was like “You know, we’ve got like 10k…”, and to me, I’m like “Ten thousand dollars…!”

Joe Fairless: That’s a lot, right…

Tyler Hassman: And all of a sudden, he’s like, “Yeah, I need at least $100,000 to start the process from you guys”, and we’re like “Oh, no…” So then we’re like, “Oh, my god…”, so we kept on doing networking, getting it going, and then Bailey, my business partner, he actually had a close connection that actually was interested in real estate, and they ended up just putting the $100,000 in.

Then we had some breathing room, we had another three months to come up with the rest, even though we’re telling the seller “Yeah, we’ve got it, we’ve got it… We’re good, we’re good”, but we had some conditions to be met, so we were doing our inspections in the three months… And then that investor actually ended up just putting in the full amount.

Joe Fairless: And what’s the structure of that arrangement? Just to educate the listeners…

Tyler Hassman: Absolutely. What we do on that particular project – it’s a joint venture partnership, so they’re actually providing a shareholder loan. Those investors got 40% of the deal, and then we got 60%, and then of course we gave 10% up for George, one of our partners, to sign on the mortgage… So essentially they’ve got 40%, and how we structure it is that we pay them back 100% of cashflow. All the cashflow goes directly to them until they get all their money back, and then once they get their $400,000 back, then we’ll split it, where we’ll get 50% and they’ll get 50% of cashflow.

Our whole analogy on these is that we get a closing fee of 1%-3% at the beginning of the deal – acquisition fee, closing fee, whatever you wanna call it, so that our company can stay afloat, and then usually between I would say year five and six they’ll have their full capital back by cashflow, or if we take out [unintelligible [00:18:44].09] equity that we have in the building at that time, depending on how the market is, and then they’ll have continued ownership for the years to come until we either sell, or somebody sells shares. So we’re a long-term investment for them.

Joe Fairless: Yup. And on the long-term investment front, what type of financing do you have on the deal?

Tyler Hassman: We get mortgage financing on there.

Joe Fairless: When does the loan expire?

Tyler Hassman: The loan expires in 30 years.

Joe Fairless: 30 years.

Tyler Hassman: Yeah, exactly. But we’ve got a five-year term on it.

Joe Fairless: Okay, so it’s amortized over 30, but there’s a balloon payment in five years?

Tyler Hassman: No, so in five years we’re able to actually renegotiate the mortgage, but the amortization is the 30 years. We have the CMEC mortgages up here in Canada, so we don’t have no balloon payment or anything at the end of that five years. It’ll just continue on. [unintelligible [00:19:32].27]

The analogy with this and how our mortgage is – if we were to plan to own it all… Oh, sorry, the amortization — it’s not a 30-year amortization; basically, in 30 years we’ll have it paid off. That’s what I’m trying to get at. I know what you’re saying, because if it was bridge financing, amortization would be 30 years, then we’ll have a balloon payment at year five, and then we own it cash and they’re paid out… I get what you’re saying there, but no, this will be the standard mortgage on it, for 30 years. If we don’t remortgage or anything at the end of that 30 years, then we’ll have it paid off.

Joe Fairless: Okay, I’m with you. So there’s no balloon payment at all over those 30 years.

Tyler Hassman: Correct.

Joe Fairless: Different types of terms you all got up there, than us, in the U.S., that’s for sure. It’s possible to do something like that with our deals, but it’s not typical. Usually, there’s a 3, 5, 7, 10, 12, 15-year balloon payment on the loan for commercial loans.

Tyler Hassman: Yeah, that’s interesting, because I know up here if it’s private financing, then absolutely. Or if it’s seller financing, or vendor financing, or whatever you wanna call it… But up here it’s a standard mortgage; that’s how everybody gets their deals done here, unless they’re using, like I said, private money.

Joe Fairless: So you’ve basically made $15,000 at closing, because you got that 1%, and that’s split between you and your partner, and you got 50% ownership in the deal, which is zero until the money person receives all of their money back, which is $400,000, and then profits are split 50/50 thereafter, is that correct?

Tyler Hassman: Correct.

Joe Fairless: And are they making any interest on their 400k over the period of time that it’s needed to be paid back?

Tyler Hassman: No. The way it’s structured is that these are a certain type of clients that we work with. They’re the type of clients that are fine with having that money tied up… Even though we’re paying them back in quarterly payments, that’s still just going to the principal. But here’s where the huge returns are coming in – at year five, when they have all their capital back; then they own 50% of that asset, so they’re gonna get 50% of cashflow for the next 10, 20, 30 years, of that building. So then it’s gonna compound and make a lot more than if we were just doing a 10% interest over five years. Do you get what I’m saying?

Joe Fairless: I get what you’re saying.

Tyler Hassman: There’s other stuff we’re working on now – our boutique hotels, and also the short-term rentals we’re gonna be doing down South. Those we’re working on just doing interest-only. So we have investors, at least for the short-term, quick returns, a year or two-year agreements, and that’s what we’re gonna do. But these types of clients we’re working with on our multifamily properties, they’re the types that they’re looking to build that long-term wealth; 5, 10, 15 years from now is what they’re worried about, because right now they’re sitting very comfortable.

Joe Fairless: You mentioned some project(s) in Costa Rica that you’re working on with more boutique hotels; you’ve got some multifamily deals where you live, and then I think you mentioned something else, which if you didn’t, you probably have something else going on, right?

Joe Fairless: Alright, there we go, vacation rentals… So some people say there’s a lot of power in focusing on one thing and doing that well; what are your thoughts on that?

Tyler Hassman: I would say to a point, but then again, I work 14-hour days, seven days a week, so I’ve got lots of time. Because here’s the thing – I have so many people that are like “Dude, you need to stay focused on one thing. You’re focused on way too many things.” And then those same people that tell me that are working eight hours on their business, five days a week. So I’ve got a lot of time.

What I do is — especially with Gary Keller, The One Thing, his book… I love that book, it changed my life. What I do is I basically hyper-focus on each project at certain times during the day. Because when it comes down to my multifamily, it doesn’t require me to work 14 hours, seven days a week, non-stop, on that. Maybe it only requires four hours of intensive work each day, and then the short-term rentals maybe three, and then the Costa Rica maybe more…

So I manage my time really well, but I’m also at a point where I’m able to do that. At the start it was full-force only multifamily, but now I’ve got systems in place, and I also have people in place, so now I can diversify my time to grow my portfolio and also grow my company. So I’m not anymore dealing with the tenants or property management at any of these buildings; I’m just overseeing the deals, talking to my bookkeeper/accountant, sending out the quarterly reports, and payments to investors… So I’m able to now focus my time and shift my attention to different projects.

But for people that are just starting out, 100% you need to focus on one thing, for sure. One thing, and go until you master it. Now, here’s the thing – I don’t master anything; I believe I can always be growing. But I’m at a point where I am able to focus on other projects now, and I love what I do, and that’s why I’m working basically 14-hour days, seven days a week. I’m never that type of person that just work first; all the exercising, focus on my health, travel, friends and relationships as well, but I love what I do, so that’s why I’m putting in long shifts and doing all this crazy stuff.

Joe Fairless: Best ever deal you’ve done that we haven’t talked about in detail already?

Tyler Hassman: An eight-unit apartment building that we’re actually gonna be wholesaling. Just on the verge of closing.

Joe Fairless: What’s a mistake you’ve made on a transaction so far?

Tyler Hassman: Not being with the right partners.

Joe Fairless: Will you elaborate?

Tyler Hassman: Yeah, managing partners – making sure you truly do know your partners. And I would say — not ask for referrals, but ask other people that have done deals with them their opinion on them and what their experience was.

Joe Fairless: And how can the Best Ever listeners learn more about what you’ve got going on?

Tyler Hassman: They can hit me up on Facebook at The Young Guns of Real Estate, or Instagram Tyler Hassman.

Joe Fairless: Tyler, thank you so much for being on the show, talking about how you got going and how you have acquired the properties that you’ve acquired, how you’ve structured it with your investors, especially on the deal that we talked about in detail – actually, we talked about two transactions in detail – and the challenges that you came across, and what you did to overcome them.

Thanks for being on the show. I hope you have a best ever day, and we’ll talk to you soon.

Stefan was “sick and tired of being poor” when he came across Rich Dad Poor Dad. He sold all of his rock band equipment and jumped all in with real estate investing. After a few years, he was elected into the Rich Dad Hall of Fame! Hear his strategy for starting from scratch and building a multi million dollar portfolio. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!

I have used him for both agency debt, help with the equity raise, and my consulting clients have successfully closed deals with Marc’s help. See how Marc can help you by calling him at212-897-9875or emailing himmbelsky@easterneq.com

TRANSCRIPTION

Joe Fairless: Best Ever listeners, how are you doing? Welcome to the best real estate investing advice ever show. I’m Joe Fairless, and this is the world’s longest-running daily real estate investing podcast. We only talk about the best advice ever, we don’t get into any of that fluffy stuff. With us today, Stefan Aarnio. How are you doing, Stefan?

Stefan Aarnio: Great, Joe. Doing great.

Joe Fairless: I’m glad to hear it. A little bit about Stefan – he is an award-winning real estate investor. He actually won the 2014 Rich Dad International Hall of Fame Award. He’s also an author, an entrepreneur; started with 1,200 bucks and has built a multi-million-dollar portfolio. Based in Winnipeg, Canada, and you can say hi to him – his website is in the show notes. With that being said, do you wanna give the Best Ever listeners a little bit more about your background and your current focus?

Stefan Aarnio: Yeah, my story started when I was 16 years old and I wanted to be a rock star. I told my mom and dad, I said “I wanna be a rock star. I wanna be rich and famous.” Of course, they said that’s a horrible idea, but my mom said “I support you, honey, so why don’t you go to university and get yourself a music degree”, because of course, rock stars need to have a music degree, which is completely false… [laughs] Yeah, I know, we still laugh at that.

Long story short, I ended up graduating from the university of Manitoba at age 22, and I had a post-grad depression because I dropped out of the music school, I dropped out of computer science, I dropped out of the business school, and finally I took two poetry classes, got an English degree with a minor in music, and it was 2008. There was no jobs for a guy with an English degree, so I worked my whole life, 22 years now, getting out of school, and there was nothing at the end. I got depressed.

I started working in a call center, I was making $10/hour, I had a guitar teaching job, I was teaching guitar to kids for 10k/year, living in my mom’s basement… And to me, it wasn’t the life that I was promised when I was younger. I thought “Man, there’s gotta be more out there. I’m tired of being poor.” I wanted to have a house, and a car, and maybe afford a girlfriend one day, or a wife; I thought “Man, I can’t be poor. I’m sick and tired of being poor.”

So I read a little book called Rich Dad, Poor Dad, and it totally changed my perspective. I shut the rock band down, I ended up selling all my equipment, selling my gear, everything. I went all into real estate. I started going to seminars. I bought my first house in 2009 with $1,200 of cash, with five other partners. It was a crazy [unintelligible [00:03:34].05] horrible idea. Never do that.

Joe Fairless: [laughs] Oh, my gosh…

Stefan Aarnio: Just the stupidest thing.

Joe Fairless: Did everyone put in about $1,200?

Stefan Aarnio: Oh, buddy… It was such a bad arrangement… The deal was like 5 out of 10; it was okay, it cash-flowed, but it was a horrible idea. Anyways, long story short, the first year I did one deal; the second year I did one deal. The third year I did 12 deals, and I did 24 deals the next year, and then 30 deals, and now my team does about 50 deals a year. The whole difference was I ended up getting the proper coaching, proper mentors, and in 2014 won Rich Dad Hall of Fame, which was super-cool, because the story started with Rich Dad, and they validated me… They only give out one award for that in Canada per year, and I think five in the U.S, so pretty cool to come full circle with that.

Joe Fairless: When you say you do 50 deals a year approximately now, are those buy and holds?

Stefan Aarnio: Yes, it’s a mixture. I have an acquisition team; I’ve got three guys on the acquisition team right now… And a lot of them are actually just wholesale. We tie it up, flip the contract; tie it up, flip the contract, make a little bit of money.

Joe Fairless: What do you make on average per deal?

Stefan Aarnio: I’d say usually 5k-10k, but sometimes it’s 3k, sometimes $500, sometimes it’s 20k… It’s a variable amount. Some of my students have done 70k per deal on some deals, and I think that’s amazing. But my team – it’s a lot of fives and tens. And then I’ve got a bigger commercial storage unit I’m working on, 300 storage units. That’s a big 50,000 square foot warehouse. Then I’ve got a bunch of buy-fix-refinance-rents going on, which I think is actually a pretty good strategy. The great thing about it is you just warehouse debt, you buy it now, and you just let it liquidate out for the next 25-30 years. That’s amazing, especially if you’ve got good neighborhoods, good rents.

I’m a diverse guy now. For a long time it was flipping, flipping, flipping. It was 30 flips, buy-fix-sell houses a year, 30 rehabs, and now I’m diversified, I’ve changed that.

Joe Fairless: Wow. So that first one, was that a buy and hold, or was that a buy, fix and flip?

Stefan Aarnio: Oh, bro, that was a buy and hold. For 1,200 bucks we’re not gonna be able to flip it, right?

Joe Fairless: I don’t know…

Stefan Aarnio: Yeah, man… It was–

Joe Fairless: You went in with an unorthodox structure, so I had no idea what you were gonna do with that.

Stefan Aarnio: You know what – the best part of that deal is I got in.

Joe Fairless: Yup, absolutely.

Stefan Aarnio: It broke the barrier, and I was like “Man, I’m in!” My second deal I did was a big, crazy rehab buy and hold, and it was a burnt down property, it was a burnt down mansion downtown in Winnipeg. I chopped the roof off and added an extra floor, and gutted the building and put the stairs on the outside. Never do this. This is another “never do.”

That property ended up cash-flowing $2,000/month, so at age 23 I was [unintelligible [00:06:11].24] rat race really fast. I covered my expenses as a young kid, and today it’s a great deal. It’s 2018, that was 2010 I bought that. Today it’s a great deal, but at the time — again, I don’t recommend chopping the roof off a house and adding a floor. It’s just really hard to do.

Joe Fairless: So primarily, once you got going, you started primarily with fix and flips, and now you transitioned to multiple things. One of the core aspects is wholesaling, where you all wholesale approximately 50 deals a year.

You mentioned a 300-unit storage facility – is that something you currently own?

Stefan Aarnio: Right now we got the contract. The contract is going back and forth with the vendor. I can tell you a bit about the terms though, it’s amazing. It’s a 50,000 square foot building, it’s about a million dollar purchase or so, about 1,08 million, and the vendor is giving me 5-year vendor financing, 1% interest-only for two years… So think about that; that’s a massive warehouse, great location, great signage. Actually, if I put a billboard on that building, Joe, I think it’s gonna pay for the whole deal.

So getting into the commercial space – that’s a contract I keep slapping back and forth. We [unintelligible [00:07:21].22] Not final yet… But that’s a redevelopment, with 300 units, and an office share. We’re gonna go into a big ol’ warehouse…

Joe Fairless: Just so I’m understanding the terminology, because it might be a little different in Canada — because I assume this is in Canada…?

Stefan Aarnio: Yeah, I’m up here in Winnipeg, yeah.

Joe Fairless: Okay, got it. So when you say the vendor, is that the lender?

Stefan Aarnio: Vendor — so you guys would say seller. I guess you say seller finance?

Joe Fairless: Okay, got it. Alright, I’m with you.

Stefan Aarnio: I’m French — or, I’m not French, but in Canada we’ve got all this French lingo. Sorry, man.

Joe Fairless: Okay, seller financing. Now it all makes sense.

Stefan Aarnio: Yes, you say seller financing, I say vendor financing. Yeah, seller financing… And it’s amazing, because this is gonna be a big rehab project. We’re buying it for $20/square foot, we’re putting in $20/square foot, and something like that, when it’s up and running at 85% occupancy, does $22,000/month cashflow. That’s way different than a little crappy fourplex that does 2k.

So yeah, it’s evolution, and it evolves, and along the way I’ve also become quite an internet marketer and learned a lot of business skills, and built a team… We’ve got 11 people working here every day, so I’m all about the team, and all about the leverage that you can get from having other people doing the day-to-day things.

Joe Fairless: Why not double down on the wholesaling business – because I’m sure there’s more deals out there – and just focus on that?

Stefan Aarnio: You know what, I think the limiting factor is talent. I’m actually gonna be overhauling the wholesale side pretty soon. It’s all about talent; when you start building a team and you start scaling — I was mentioning yesterday to a guy I was recruiting, I said it’s about talent and muscle. The team I have right now is okay, it’s flowing, they’re doing stuff, but I think it could be done better, Joe, and I think one of the hardest things with building a real estate business is there’s only two ways to scale – you either do more deals, or you do bigger deals. More money, or more deals. And all of that takes more skill. So you either train skills to people, or recruit better talent. For me, with that team right now, I think we have to upgrade the talent on the team; we probably have to reorganize the management a little bit.

I agree with you, man… I think that there’s a lot more meat on the bones there, but it really is about management, and it’s about — with flipping, I don’t do as much flipping, because that’s a very management-intensive thing, and I don’t have the right manager to manage that… Sort of like The E Myth – if you’ve read the book E Myth, it’s all about the manager.

Joe Fairless: When you take a look at the end of this year – or let’s just do year-to-date – overall income coming in to your business, what makes up the largest chunk of that?

Stefan Aarnio: I’m a guy who has multiple income streams; I look at it like this – there’s earned income, and then there’s the equity side, where you’re building equity… And of course, in real estate when you build equity, you can’t just cash that out, but you’re building it. And then the other side is scalable business. My organization is a multi-seven-figure operation, and the income streams are always fluctuating. Sometimes information is really good, sometimes wholesaling is really good… I’ve even had times – years ago – at a staging company, the staging company kept the business alive in bad times.

So it’s a multi-seven-figure organization, and depending on how things are doing in any way, any case — right now in Winnipeg, where I’m at, there’s talk that the market has gone down 12%. That’s gonna affect things a little bit, and it’s gonna change the game a little bit.

So they’re always changing, and I think it’s like the tide – it goes in and out. That’s why I’m a big believer in diversifying, and having a lot of different things, like for example storage. That’s a different thing than flipping. Flipping is great in an up market. When it’s going up-up-up, it’s easy-easy-easy. When it goes down, you’ve gotta be really technical and really good on your buys.

Joe Fairless: So for this year what’s the lead one?

Stefan Aarnio: This year the lead one in the real estate is probably the wholesaling. Yeah, probably wholesaling over there. Then the rentals, and they just keep chugging along. Then the other stuff – all the information, and all that. The beauty with that is that’s not tied to land.

The toughest thing I think in business is scaling, scaling, scaling; how do you scale. And one of the toughest things with real estate is you’ve got land, you’ve got the government, you’ve got lawyers, you’ve got the city that sometimes does weird things, and those are where I think the biggest limitations with real estate are – it’s where you’ve got the government coming in, or the city, and that’s where suddenly things can go really good or really bad, depending on what side of the fence you are.

Joe Fairless: Can you tell us about the staging company and how that helped you all when the economic times were down?

Stefan Aarnio: Yeah, so I’m a big vertical integration guy. That’s where you take your expenses and recapture them through vertically-integrated businesses. And when I was flipping 30 houses a year, flip-flip-flip-flip, buy-fix-sell, buy-fix-sell, buy-fix-sell, I have eight sets of staging furniture. So we have a warehouse, and we’ve got a truck, and we move this furniture around… And we would charge anywhere from $3,000 on the higher end, $1,500 at the lower end. Having sets of furniture – you can set up a set of furniture for $5,000-$6,000 and rent it for about $1,000 to $3,000 for the first month, and after that probably anywhere from $1,000 to $1,500 ongoing. So if you have eight sets of furniture out there and everybody is paying you $1,000/month, that’s $8,000/month of money coming in.

I had some times where I had all these flips that weren’t selling, and suddenly, like, oh my god, we started deploying some staging, staging goes out there, and sometimes you need five grand to survive, and suddenly five grand is hitting your bank account… And those little thousand-dollar deals – they add up, especially in a business like real estate, where it’s illiquid a lot of the time. You might have a million dollars of equity and zero cash, and now you’re in trouble.

Joe Fairless: So where is that staging company now?

Stefan Aarnio: It’s still running. Again, it’s a matter of it doesn’t scale. So it’s a business where we’ve got eight sets, we have a warehouse that I lease (how is that…?), and the furniture goes out, it comes in… One of my guys and his girlfriend – they run it, and it’s cool for me, because the checks come in, I sign the checks, I pay them.

I have not staged a house ever in my life, Joe. I’ve never done it. I’ve never done the work with that; I’ve always had someone doing it, and they do the labor, so I pay them their piece… It’s almost like a real estate deal, and then you’re moving this little furniture around… But you run into that same problem – it doesn’t scale.

Joe Fairless: Why not?

Stefan Aarnio: Well, if you have, let’s say, 50 sets of furniture, the biggest issue with it is every realtor has his own little stager; so he might have his girlfriend, or he might have his own set of furniture, or he might have his friend or some people who do staging for ridiculous rock bottom prices… So the marketing and the selling of it is a little bit difficult.

Then the other thing is it’s just not a fun business to scale. It doesn’t scale well. It’s trucks, it’s people, it’s damages… Sometimes people stage a house and they forget the forks in a drawer, and you’re losing your forks and someone’s gotta go and buy more forks… Just the minutiae of that – it doesn’t scale well.

I’ve left that business at an eight-set furniture business, and it cash-flows, it makes money, but it’s probably not the biggest thing, where I’m like, “Oh man, this is gonna win the war of life for me.” It’s a cool hobby business. I always get approached by young women who are like “Hey, I wanna work in your staging company, I wanna do that.” If you’re a stay-at-home mom and you’ve got some furniture – that’s awesome. But if you wanna make a million dollars a year, I think that’s gonna be a really hard time to scale that to a million dollars.

Joe Fairless: You mentioned you were a proponent of vertical integration. What’s another example of vertical integration within your business?

Stefan Aarnio: With the flipping, the best thing that I did with that was I take a finder’s fee on the deal, so that’s the profit center. The second profit center is I get the staging contract. The third profit center was we charged a little fee for the bookkeeping, so there’d be a little admin fee… And then, if it was a joint venture, I’d take half at least, or we would have a different structure with the investors. So it’d be four profit centers per deal, which is really great, and that would help me run the pipeline, because your acquisition guys gotta get paid, stagers gotta get paid, bookkeepers gotta get paid; so we take all those little integrations there, and with the storage that’s coming up, I’m looking to vertically integrate that, because when we have the storage business, the staging is gonna move in there, and then my office is gonna move in there.

I think other things like bringing in-house a social media, marketing agency in there, bringing video production in there – all the things I spend money on, I try to recapture into vertical integration, so that rather than spending money, you’re making money on that. Some of those scale really well. A social media agency scales beautifully, whereas furniture in a truck, in a storage unit, is really hard to scale.

Joe Fairless: I get it. That makes sense. You said you have 11 people on your team… What do they do?

Stefan Aarnio: About eight or nine of them are income-generating, so those are either salesmen, in my info business, or they’re acquisitions people. Then we’ve got in-house accounting, which is awesome; having in-house accounting makes your life awesome. I haven’t opened my mail in five years. They just open it, they sort it, they bring me a stack of signed things and reports… It’s amazing.

I’ve got a really good assistant, who just gets better and better every day, and then the other person – we have a guy who does nothing but shipping mail. That’s all he does – mail, every day.

Joe Fairless: What is he mailing? Direct mail…?

Stefan Aarnio: We sell a lot of books. We’ve got a lot of books, courses, programs, so every day there’s a massive FedEx thing and a massive Canada Post going out. So that guy just does mail, and that’s a pain in the neck when you physically mail stuff, because people lose it, or they put the wrong address… And of course, the customer is always right, and Amazon gets it in one day to the customer, and they’ve gotta wait a week; people get pissed off now, right?

Joe Fairless: Right. You’ve got the 11 people, and it’s interesting how you labeled the 8-9 as “income-generating.” I love thinking about it that way… Who came first, and how did you bring on these team members? We can just group them as the nine income-generating people, the accountant, the assistant and the shipping person… Who came first and in what order?

Stefan Aarnio: Oh man, Joe, that’s the best question, because there’s so many guys out there that want to scale, but they don’t know how or they’re afraid. Now, I remember when I went – I think it was 2013, so about five years ago – to a conference, and a friend of mine was selling Infusionsoft packages. I guess he had an Infusionsoft guy that would fly in, and he was selling it, and… I’d written a book, and I was flipping a bunch of houses, and I was alone, I was one guy… And he said to me, “You should buy Infusionsoft.” And everybody goes, “Oh, man, 1,500 bucks down, and 300 bucks a month… I don’t wanna pay that.” He said, “Just do it”, so I just did. I swiped my credit card, I bought the CRM, and I went home and I had no employees.

I had a little office, I walled off a part of my house, I built a wall, with nice doors and everything, and branded it up so it’d look cool… I had this little office, empty; I went to IKEA, I bought three desks… I didn’t even know what to do with Infusionsoft; I didn’t know anything about it, and I still don’t know anything about it… Other people do it, I know nothing about it. So I hired two girls – one girl was gonna be an acquisitions person; and I put her on salary, which was a horrible idea… I would never put an acquisition person ever again on salary. Bad idea. And then I also hired another girl – I had these two girls trying out to get a job with me, and the deal was “Go out and get me a real estate deal at a discount, and whoever gets it is gonna get the acquisition job.” That was the interview, and it went on for like a month or so. These girls are interviewing for a month, trying to get a deal…

So one of the girls got a deal, I hired her for acquisitions, on salary. Bad idea. Then the other girl – I was like, “I don’t know what to do with you, but I love you, I think you’re great.” So we ended up opening an accidental coaching business. And I just call that “accidental coaching” because I never planned on having a coaching business. But I said I don’t wanna let this girl go, so I’ll open a company with her.

Then the third person we hired was a bookkeeper. That was a big disaster, because that bookkeeper didn’t bank-reconcile the books to the bank account, and we went for 2-3 years with no reconciliations, and me being ignorant, I didn’t know what a bank rec was. So suddenly, three years down the road, I had a $40,000 bookkeeping bill to clean up my books, because nothing was tied to the bank account.

I was getting reports, I was getting Excel spreadsheets, I was like “Oh, this looks great. This looks great.” Nothing was reconciled. I had some multi-millionaire investors investing; one was an accountant, and he said to me “Your bookkeeper is not reconciling anything.” I didn’t know what that meant, so I was like “Oh…” And they were getting freaky and sweaty, because they did their own books on their own account with me. So I had my rich guys in one account, then I had everybody else in another account… So their account was reconciled tickety-boo, super-tight, numbered checks in Ziploc bags, and then the other account was just the wilderness. It was like squirrels, and gerbils, and wolves, and rabbits, and eagles… It was crazy, man… That was a super-bad–

Joe Fairless: How did you find that bookkeeper, the one that messed up?

Stefan Aarnio: Oh my goodness, you know what – I don’t even remember. My guess is – I have a long list of hires and fires… The worst people have been from the online classifieds, like Craigslist, Kijiji… She was probably a Kijiji. And then all my best hires have always been referrals or customers. Those are tremendous. I stopped hiring, because I had a headhunter I hired. I think I burned through four or five bookkeepers through that headhunter, and then the lady that does it now, she’s really great. She was a referral through one of the headhunters. She came in and starting working for minimum wage in office, sorting things during that bookkeeping debacle, and then she ended up becoming the bookkeeper, and she’s grown from there. So everybody in my office is a referral. Kijiji – forget it. Craigslist – forget it. Headhunters – forget it. Recruiting people is much like acquiring customers – you need to indoctrinate them and they need to be in love with your brand. I always say it’s like Disneyland – if you don’t believe in Disney, you’re not working at Disneyland. If you haven’t seen the little mermaid, you’re not coming to Disneyland. If you don’t like beauty and the beast, you can’t work at Disneyland, and that’s how my place is. You’ve gotta read all my books, do book reports, you’ve gotta know everything about it to even come to Disneyland over here.

Joe Fairless: What’s your best real estate investing advice ever?

Stefan Aarnio: Oh, man… Best real estate investing advice ever. Are we talking for an advanced person, or a beginner?

Joe Fairless: Let’s go advanced.

Stefan Aarnio: Okay. Interesting, I think right now for me on an advanced level it’s about strategy. I’m playing it like a Monopoly board now. I want key pieces, strategic pieces of land, in strategic neighborhoods. For example, this building I’m buying right now, it’s got signage on it that’s better than the building. That’s a strategic piece.

I just bought my neighbor’s house, because I’m assembling on my street; I’m assembling, buying them one at a time. I think that when you assemble or when you have strategic pieces and you think strategically — it’s not just about cashflow… Everybody wants to know “What’s the ROI? What’s the cashflow?” They’re like these little sizzly hot little numbers. I’m more interested in what’s the strategic, what’s the 30-year term of this.

Here’s a crazy thought, actually, Joe. This might be it. If you’re doing buy and hold and if you’re holding it forever, it kind of doesn’t matter what you paid for it.

Joe Fairless: Yup.

Stefan Aarnio: And that should blow your mind a bit, unless you already think that way…

Joe Fairless: As long as it cash-flows.

Stefan Aarnio: Yeah, it cash-flows even 50 bucks, 100 bucks, or whatever. If you buy it today at any price and you hold it for 30 years and you plan to never sell, that is an amazing deal. That’s what Warren Buffet does. So jump with Warren Buffet and buy things with the intent of never selling, and buy them strategically, so you own that street corner, and you own that sign.

I just bought my neighbor’s house and I’ve put my employees in there, and they live there in offices next door. Strategic. The strategic things you do with real estate on a 30-year period or a lifetime period is where you’re gonna make the most money.

Joe Fairless: We’re gonna do a lightning round. Are you ready for the Best Ever Lightning Round?

Stefan Aarnio: The Fourth Turning. I think it’s by William Strauss. It’s about the four cycles of history. Amazing book, you’ve gotta read it.

Joe Fairless: What’s the best ever deal you’ve done that we have not talked about already.

Stefan Aarnio: That’s a hard one… I’d say buying this neighbor’s house here and turning into employee quarters is just really hot. It’s next-level with the strategy.

Joe Fairless: What’s a mistake you’ve made on a transaction?

Stefan Aarnio: Oh, dude… Worst one ever – I had a deal, we were flipping, it was a buy-fix-sell on a duplex, and we found out — everything it said duplex-duplex-duplex; my lawyer bought it, we paid for title insurance, and the city came back to us and said it wasn’t a duplex, and our title insurance was never purchased, so now we were suing for errors and omissions. That was absolutely brutal. That was like a 100k loss. Super-brutal.

Joe Fairless: What’s the best ever way you like to give back?

Stefan Aarnio: Best ever way to give back… That’s a really interesting question. I go on Kiva and I fund chicken farms for people. So I do micro-loans, and help as many guys start chicken farms as possible. I only do chicken farms, and that’s it. Just chickens, chickens, chickens, because chickens have such a high yield that it can get the most people out of poverty. I really believe in setting people up with the chicken business.

Joe Fairless: How can the Best Ever listeners learn more about what you’ve got going on?

Stefan Aarnio: They can go to StefanAarnio.com, or follow me on Instagram, Facebook… I’m the only Stefan Aarnio on Google, I’ve got the first 30 pages just to me.

Joe Fairless: Stefan, I really enjoyed our conversation, and thanks for being on the show. I learned about how you got to this point, as well as how you scaled, the 11 people in your company, and the order in which the first couple came about. One, the acquisitions person and the unintentional coaching business, and then the bookkeeper that didn’t work out, and how you found the person who didn’t work out, online, versus referrals and having customers then team up with you.

And then also, the vertical integration, with the staging company, as well as other ways that you look to vertically-integrate your business. Thanks again for being on the show. I hope you have a best ever day, and we’ll talk to you soon.

Melanie was lucky enough to have parents who taught her about money, and how to save it. By the time she was 22 she had a “nice nest egg”. Looking for guidance with what to do with her cash, her dad suggested investing in real estate. Starting with single family homes and then moving into commercial real estate and opening her own business in a piece of property she bought. Hear what it takes to improve your quality of life substantially through real estate investing.If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!

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TRANSCRIPTION

Joe Fairless: Best Ever listeners, how are you doing? Welcome to the best real estate investing advice ever show. I’m Joe Fairless, and this is the world’s longest-running daily real estate investing podcast. We only talk about the best advice ever, we don’t get into any of that fluffy stuff.

With us today, Melanie Bajrovic. How are you doing, Melanie?

Melanie Bajrovic: Great, great! Thank you so much for having me, Joe.

Joe Fairless: My pleasure, nice to have you on the show. A little bit about Melanie – she is a serial entrepreneur, a real estate investor, a best-selling author, a speaker, educator; she became a millionaire at the age of 27, and she is the author of The Wealthy Barmaid: From Minimum Wage to a Millionaire. Based in Niagara Falls, Canada. With that being said, Melanie, do you wanna give the Best Ever listeners a little bit more about your background and your current focus?

Melanie Bajrovic: Sure, absolutely. My career in real estate started pretty young, because I started working at a really young age. I was 12 years old, and my parents had a restaurant; you know how it goes, you start working in the family business… So I started in the back, in the kitchen, I went on to hostessing and [unintelligible [00:01:56].08] and bartending, and I did that for a solid 15 years steady, all through school.

What I was doing at that time was I tried to save as much as I possibly could. My mom was big on saving, she taught me from a young age, so I was saving 100% of my paychecks. By the time I was 22, I had a good little nest egg, a bunch of money saved up… But at that time I was already like — you know, not that I don’t love bartending, but I knew I didn’t wanna be a bartender forever, so I wanted to figure out how could I make that money work for me.

It was actually my dad who recommended that I invest my money in real estate, and it was one of the options I was looking at, so I decided to do it, and that was one of the biggest turning points for me. I ended up looking at like 100 properties before I found the one, and it absolutely shifted everything for me… It was the best decision I made. It was a single-family house. That’s been my strategy ever since.

Since then, I just continued to purchase more single-family homes, building myself a little portfolio, which was super cool. It never was intentionally the idea, but I just thought “Hey, I want something for retirement, I want something just in case… What if something happens to me?” I knew that these properties would produce something. I wasn’t that savvy back then, but…

Then when I was 27 years old and I was still working in the bars, again, through school, I felt it was time I wanted to start my own business and get into commercial real estate. I knew that would be another big turning point for me, so that’s what I did. I bought a big piece of commercial property out where I’m from – it’s a city very close to Niagara Falls called St. Catharines – and I decided to run my business out of it. It’s a restaurant/bar, it’s had success five years and counting now, as we do this podcast… And again, huge turning point for me, both financially and just for my own confidence, because it was such a big decision; I was scared out of my mind. I really put everything out on the line… But again, one of the best moves I’ve ever made, and that kind of brings us to today.

Joe Fairless: Wow. Well, congrats on that starting incredibly strong out of the gate with the single-family house you bought when you were 22 years old, and then you continued to buy more. Were all those properties in Canada?

Melanie Bajrovic: Yes, they were.

Joe Fairless: Okay, cool. What type of financing did you get with those properties? Especially the first one, know that that was the first deal that you did, and banks might not have been as happy to lend to you.

Melanie Bajrovic: True. What happened on that first deal… Again, I had (I guess) — I don’t know if you wanna call it an advantage, or on the opposite spectrum, I did it the really slow and hard way; I saved up a ton of money, I was able to provide the down payment that was needed to do a conventional mortgage. Now, at the time there was a bit of a mistake here for me — if I had put in 5k or 10k more, I wouldn’t have needed the mortgage insurance. So I ended up getting it with that mortgage insurance, but that added to my monthly payments, it made it a little higher… But I did it by myself, with my income at the time; I had enough down payment, so it was a conventional mortgage on that first one.

Joe Fairless: Then how many homes did you buy after that, until you purchased a commercial property when you were 27?

Melanie Bajrovic: I purchased four more over the course of those next five or so years, and again, I saved as much money as I could; I was working three jobs, so I was able to save at an accelerated rate. I was still in school, and I lived with my parents, so I kept my own living expenses down a lot, so that I could invest in real estate. That’s basically how I did it – I was able to get those mortgages; I needed a co-signer for the last two, because my income wasn’t high enough… But the banks that I used were able to use my first few properties – the rental income – as part of increasing my rate of income to give me a better ratio, so I was able to get a mortgage with them. So they were pretty standard.

Joe Fairless: Who co-signed? Your parents?

Melanie Bajrovic: My parents, yeah.

Joe Fairless: Cool. Working three jobs at one time… Will you tell us what a day looks like working three jobs?

Melanie Bajrovic: Well, it was fun… I was just revved up, I was so excited about buying more real estate, and I always am; I’m always trying to figure out “How can I do more?” and it excites me to do so. But I’d wake up fairly early, I’d go to my first–

Joe Fairless: What time, on average?

Melanie Bajrovic: Maybe 8.

Joe Fairless: Okay, [8:30].

Melanie Bajrovic: I didn’t have to be at that first job till 10 AM, so…

Joe Fairless: What was the job?

Melanie Bajrovic: I’ve had a bunch, but this one – I’m thinking now one of the first times I was working three jobs, I was a marketing director at an arts council.

Joe Fairless: Okay, so you’d work from 10 AM to what time, as a marketing director at the arts council?

Melanie Bajrovic: It was about 4 o’clock.

Joe Fairless: Okay, 10 AM to 4 PM, and then what was the second job?

Melanie Bajrovic: My second job — it would be on different days; all three wouldn’t happen in one day.

Joe Fairless: Okay.

Melanie Bajrovic: I’d go to the bar, and I’d work till — it depends… I’d have school too though, right? So I’d have to kind of puzzle every piece in there. But if I had classes that day, I’d finish those classes… And it’s really cool in university, you get to pick your own blocks of time when you have your courses, so I was good with scheduling. Then I went to work at night; I’d most of the time close down the bar, but not every single night. Weekends, most definitely I did.

Then another job I had – I worked for a PR company, so I did public relations.

Joe Fairless: And you had that job at the same time as a marketing director? So you were going to school, and you were also working three jobs – roughly how many hours were you working on average a week?

Melanie Bajrovic: Yikes! All together, I mean… Six hours — there was that, and then a good 40 at the bar, plus another… It was definitely 80 hours.

Joe Fairless: 80 hours a week, plus going to school… [laughs] And what period of time did you do that approximately?

Melanie Bajrovic: Definitely from the age of 23 on, I was working that many jobs. 12 to 22 I was just doing the–

Joe Fairless: Yeah, sure… As a 12-year-old you weren’t working 80 hours? You’re such a slacker. [laughs] Got it. So from 23 to approximately 27? Okay. That’s incredible. What a commitment. And how did you think about your social life? You were living with your parents as a 23, 24, 25, 26-year-old… Most people — well, I don’t know about most, but some people (myself included) might think “Oh, what a buzz kill! I don’t wanna live with my parents at that age.” How did you think about that as a 27-year-old?

Melanie Bajrovic: Sure, it had its ups and downs… Also, my family background was Serbian and Bosnian, so it’s very much a culture thing that, you know, you stay with your parents until you get married, or [unintelligible [00:08:28].07] so it was very normal in our culture as well. But I was just — I don’t know how to explain… People ask me that all the time, they think “Man, you really missed out on so much” or “Is that good? All your focus now is work, and money, and investing in real estate”, but I was so hungry for it that it didn’t bug me. I just wanted so bad to secure myself financially; I wanted to make sure that no matter what, I’m gonna be able to do whatever it is I wanna do. No one’s gonna tell me no, and I’m gonna be able to just provide whatever I want for myself, and that was stronger than anything else, than any night out, partying with friends or whatever. Of course, I worked every major holiday, event, Halloween, St. Patrick’s days, whatever you wanna call it, but I was banking it, so I didn’t mind. It truly wasn’t like a huge sacrifice at the time. My wants were bigger.

Joe Fairless: Why do you think — and this is more of a philosophical question, so there’s really not a right answer… But why do you think some people want financial independence but don’t go to the lengths that you went to, working 80 hours, plus going to school, living with your parents (although perhaps it’s a cultural thing, so it’s not as shocking, but still…)? Why do you think that is?

Melanie Bajrovic: Like I was kind of explaining – it’s either just having that want that is so powerful to you, inside of you, for whatever reason… Maybe they don’t have that; maybe they’re like “I don’t know, I’m fine. I don’t need that much. I’ll always have a job, I’ll be okay…” Nothing drives them to the point of insanity, like “No, no, no… No way, Jose! I need to have my own stuff!” It’s either that, or plus, they just didn’t develop that discipline perhaps.

And again, I grew up with a family — my grandparents practically raised me; came from Yugoslavia in 1970 with nothing, with four kids, didn’t know a lick of English, knew nothing about the country or the system, the banking, or anything, and they made it, they survived, and I grew up with them, watching them work like dogs, they did whatever it took. They were in the bar industry too back in the day, and just stuff I saw them do and go through… No matter what, they just made it happen, went to work when they didn’t feel like it, three in morning, cops call, vandalism – it doesn’t matter what it is, they just get up and go, there’s no other option. So I was brought up with that, and maybe that’s where the discipline comes from potentially, that other people don’t have. That’s gotta be the only thing I can think of.

Joe Fairless: Yeah, the immigrant mindset where you’ve been exposed to your extended family – they didn’t have anything when they came to the country, and you saw that, and you wanted to replicated what they created based on their hard work, it sounds like. Is that fairly accurate?

Melanie Bajrovic: Absolutely. I saw what’s possible if you truly hustle, if you want something and get after it, you can really have it… So I felt “Whoa, sky is the limit then.”

Joe Fairless: I also think that anyone who is driven, who lives with their parents until the age of 27, will do whatever it takes to create that financial independence, so that they’re not… So maybe there’s also — if we’re not an immigrant, or don’t have — well, I guess we’re all technically immigrants in some form or fashion, but if we aren’t a generation or two removed from being immigrants, then maybe we just go live with our parents until we’re financially independent, and then that will really drive us to do something things.

Now I wanna talk specifics about this commercial real estate property… You said you’ve got your restaurant and bar; did you have a restaurant before purchasing the property, or did you create one as a result of buying this property?

Melanie Bajrovic: No, I never had my own bar or restaurant, but because I’d been working for my family for a long time, I ended up managing their entire business – and it was a big operation; 25 employees, for example… They went away a lot; they went back home to Serbia, former Yugoslavia, they took a lot of trips; I was the manager, I dealt with everything, so after years of dealing with all that, I thought “Alright, I know what it takes, I can do this on my own.” I didn’t wanna work for my parents necessarily… I didn’t wanna work for anyone my entire life; I was always an entrepreneurial spirit, I had other little side businesses of my own from the age of 16. So I always knew I wanted to be an entrepreneur, and it was just around that time that I was sort of done with it. I’m like “Okay, I don’t wanna do this anymore. It’s time for me to create my own. I need to do my own thing”, and I was ready.

So that’s at the age of 27 – I just started looking around for opportunities, for properties; I knew that the only thing I knew hardcore how to do was the restaurant business, the bar industry, so that’s where that decision came from. I found a great property for that, and started my own business from there.

Joe Fairless: So you bought the property and you created the business within the property.

Melanie Bajrovic: That’s right.

Joe Fairless: How much was the property?

Melanie Bajrovic: I paid $550,000. It’s a 20,000 square feet property. The building itself is 5,000 square feet. And it was a bar previously, so it was set up… It was super old, so I had to do a lot of fixing up of the place, but it had a bar, it had a kitchen.

Joe Fairless: And that was five years ago?

Melanie Bajrovic: Yeah, 2013.

Joe Fairless: That was five years ago… And what would you say it is worth today if you were to sell it?

Melanie Bajrovic: I’ve had some people kind of looking at it, and some commercial agents asking me if I’d be interested in selling, and it looks like the going rate around now is between 950k and 1.2 million.

Joe Fairless: Congrats on that. How much did you put into the property?

Melanie Bajrovic: That’s the best part about this deal… The way I structured it was some creative financing by using other properties as collateral. I was able to pick it up with hardly anything down up-front. It was really like a crafty deal.

Joe Fairless: Will you elaborate on that?

Melanie Bajrovic: Yeah. One of my best mentors is my uncle; he is a huge financing guy and he really helped structure that deal… But I just leveraged the other properties, all as collateral… And I think it was 5 points to the banker, and it was a good rate. I had to pay closing costs, sure… I mean, maybe when all was said and done it was less than $20,000 that I had to put upfront.

Joe Fairless: Wow. And then to get it to be functional and ready for the first customer to have a beer, how much money did you put into it?

Melanie Bajrovic: Interesting story about that. I purchased it (I believe it was) March 1st, and it ended up falling on a Friday. I was adamant that I wanted to open up for business immediately. This other restaurant that I had purchased it from – they had gone downhill, but they still had the doors open… And it was really rough, but I thought “I don’t wanna wait… If there are any regulars or customers still coming to this location (which I saw there were, circling in and out), let’s open the doors right away.”

So you wouldn’t believe me – I had a team, I had already hired girls and doing interviews elsewhere; I did some at my parents’ restaurant, letting them know that a new bar is opening up, screening people… So I had a team, I took an SUV truck, went out and bought kegs, cases of beer, I had another girl buy a bunch of food… I had everyone who was opening up with me come at this very time, and the lawyer ends up giving me the key at like [4:30] PM on a Friday – I literally drove from the lawyer’s office, came there, unlocked the door… Everyone rushed in, swept, mopped it, a quick little thing, put some food and the beers in the fridge, and I opened for business right away, that day.

Joe Fairless: Wow.

Melanie Bajrovic: I did my renovations and things little by little by staying open. I did a lot of stuff overnight, but overall, because I did it little by little, it’s hard to give you a number right now. At least 10k in the very beginning, and then I did more – I redid the bar area, I redid furniture, I redid the booth area… But all one by one.

Joe Fairless: Yeah. So 20k to close approximately, 10k at the beginning, so that’s 30k, and the way you’re talking about this, it sounds like maybe another 20k over the last 4-5 years?

Melanie Bajrovic: For sure. We’re not counting all the repairs I’ve had to do [unintelligible [00:16:17].24] Yeah, I’d say another 20k, for sure.

Joe Fairless: And then if we were counting those repairs, approximately what would that be? [laughs]

Melanie Bajrovic: Oh, man… Something breaks every week, so I don’t know how to tell you this one, but… Oh gosh, at least 10k/year. One year my HVAC went, and that was 10k by itself, never mind any compressors, or fridges and coolers and stuff… But let’s call it at least 10k-15k/year.

Joe Fairless: Got it, okay. Fair enough. So no more than around 50k, not including ongoing repairs and maintenance, but just improvements – about 50k all in to close, and now it’s worth approximately 950k, up to over a million.

Melanie Bajrovic: Yeah.

Joe Fairless: That’s incredible. Now, if they were to buy that, I imagine they’d be buying the bar and the restaurant, which would be a little sticky, since you’re the owner of it…

Melanie Bajrovic: Right.

Joe Fairless: So how would that work?

Melanie Bajrovic: Well, are you talking about the price, or…?

Joe Fairless: Yeah, if someone were to buy the property from you…

Melanie Bajrovic: I would include the business.

Joe Fairless: You would include the business. But you’re the one who’s running the business, yes?

Melanie Bajrovic: Yeah. I split it up into two corporations. One company is the tenant, which I happen to be the president of, and the other company is the real estate holding company that I rent from. So it is funky, because I’m both, but it’s set up in two different corporations. So if I were to sell, I would sell everything as is. Of course, I’m not gonna rip the bar out or rip any equipment out from the kitchen. I would just include all that in the price, and I’d sell it with the business, for sure.

Joe Fairless: In order to get this deal, you did the creative financing. Your uncle helped mentor you, and you leveraged your five properties and used them as collateral, and that allowed you to have less down than what’s typical… Let’s go through a hypothetical scenario – you get a really good offer for, let’s say, 1.2 million, because I think that was the high end of the range, yes?

Melanie Bajrovic: Yeah.

Joe Fairless: Okay, so you get a really good offer and you decide “Yeah, let’s do this. I’m gonna sell”, and then you take the profits from that money and you go to buy something else. In order to buy something else, you are told by the lender that you need to use your other properties as collateral in order to guarantee this loan. Would you still do that?

Melanie Bajrovic: I would. If it’s a great deal and I see a ton of potential that it’s gonna make me a lot of money — again, I’m certain in my capabilities that I’ll make sure whatever the business is, whether it’s just commercial rentals, my own business… I’d have to look at the situation, everyone will be different, but yeah, I would do it again, absolutely.

Joe Fairless: Cool. And obviously, you know the reason I’m asking, because it could be a domino effect; if something goes wrong, then boom – everything gets wiped away and now you’re starting from scratch, whereas if it was isolated and you weren’t using this collateral, then it wouldn’t be a domino effect.

Melanie Bajrovic: But it’s just a matter of doing the deal or not, if it’s a yes or no; yeah, I’d still do it, but making sure all your ducks are in a row and you assess the risk.

Joe Fairless: Based on your experience, what is your best real estate investing advice ever?

Melanie Bajrovic: Oh, boy… So I thought about this a lot, and one of the biggest in terms of single-family homes, if you’d like to discuss that, was really renting out your property to maximize your profits and your passive income. I think this component gets overlooked a lot. People are just really trying to make some quick money, get it occupied, but it’s so gravely important; it’s one of the biggest lessons I’ve learned so far, and I can really get into some details.

Joe Fairless: Yes, please.

Melanie Bajrovic: After setting your rent, learning how to do all that property marketing, conducting the showings, getting to know people, it’s really processing the application and screening the tenants – that’s one of the most important parts. I skipped it once; I can get right into that. So I didn’t verify these people – and this was like my fourth house, so I’m really embarrassed by this story…

Joe Fairless: They were really nice, and they gave you their word that they would pay, right?

Melanie Bajrovic: Absolutely! It just felt awesome… You know, when you just feel great vibes with people… They were wonderful people, so I wasn’t worried at all. I tried calling the previous landlord, but I just couldn’t get a hold of him, or something. All I did was call their jobs, and I learned, “Okay, fine” they were employed, but I didn’t do the proper background checks, credit checks, previous eviction notice checks – I didn’t do any of that stuff… And I got screwed royally; I hope I can say that word on your show, sorry…

Joe Fairless: People have said worse.

Melanie Bajrovic: Yes, okay! So they were literally con artists, I learned later…

Melanie Bajrovic: Yes, yes! So what they were doing out there – amongst plenty of other things, I learned later – is they were posing as landlords in Toronto, and it’s a huge market there, so you get a ton of people coming out… And because it’s so competitive, people are throwing money at them, like “Here’s a deposit! Here’s a deposit!” So they were doing showings, taking all these deposits, and they fled the city.

Joe Fairless: On your property?

Melanie Bajrovic: Not on mine. That’s what they did in Toronto, I learned later. So because I didn’t verify stuff, it just turned out to be such a nightmare. I didn’t triple-check after the first month to make sure that the checks have cleared, didn’t check the second month; third month, finally, I’m like “Oh, this looks funky in my bank account”, so I looked at it – bam! I just see that nothing ever cleared, no payments went. They didn’t even get the utilities in their name; I didn’t do that afterward either, which is a big one now… I call utilities, just to make sure “Hey, did these tenants put it under their number? What date is it starting?”, blah-blah-blah… I didn’t do any of that.

I was $6,000 in debt because of them at this point, and now I can’t even kick them out; she’s pregnant, so… [laughter] Yeah, it was a disaster. By the time it’s your court date – it’s like three months later, and it cost me so much money, and they were mean to me… It was just brutal. Big mistake.

I was technically lazy, and I was just trusting without verifying. I don’t mind to trust people, but verify. So I really wanna make sure that everyone out there – please, God, don’t ever skip this step! Don’t be lazy, don’t overlook anything. They could be the nicest people in the world; you just never know.

That was the only bad experience. Every other tenant, I did everything right; I screened everyone properly, did all the checks, and 5, 6, 7 years later, still in my homes; beautiful, they take care of that property like it’s their own. One tenant just repaved the driveway, doesn’t ask me for a penny… It’s like their house. So you can have great experiences too, so don’t be scared off by it, but I’m just saying – don’t ever skip that step!

Joe Fairless: Trust, but verify. We’re gonna do a lightning round. Are you ready for the Best Ever Lightning Round?

Joe Fairless: Best ever deal you’ve done that we haven’t talked about so far.

Melanie Bajrovic: Oh, man [unintelligible [00:23:51].07] it’s gotta be my first, first house; it was awesome. It was a great deal. I got it for a super low price. It was an estate sale, and everything was just great.

Joe Fairless: What’s a mistake you’ve made on a transaction that we haven’t talked about.

Melanie Bajrovic: That we haven’t talked about – I would have to say maybe just not asking my banker for a lower rate.

Joe Fairless: Best ever way you like to give back?

Melanie Bajrovic: That’s truly the reason why I wrote my book and created a program, so I can just give knowledge, mentor others on how they can do all this, too. It’s giving my experience to helping fast-track their journey and impact other’s lives. That’s the best way I can give back.

Joe Fairless: And how can the Best Ever listeners get in touch with you?

Melanie Bajrovic: Absolutely – on my website, melaniebajrovic.com, anywhere on social media… I’m on all the stuff: Twitter, Instagram, Facebook, YouTube, LinkedIn – I’m all there at @thewealthybarmaid.

Joe Fairless: Melanie, thank you so much for being on the show. Thank you for talking about your journey, how you were able to save money through hard work from 12 to 27, some sacrifices – or perceived sacrifices; that is certainly debatable, because what exactly you are sacrificing to then gain… So perceived sacrifices you made, living with the parents – clearly not as social of a life as other 23-27-year-olds, because you were working a whole lot… Even though it was at a bar, which could be fun… But then also the approach that you took for the creative financing on your first commercial deal, and the risk assessment that you thought through from a collateral standpoint, using the first five properties as collateral. Some might not be comfortable with that, some might be comfortable with that, and it’s just interesting to hear your thought process for why you were comfortable with that.

Thank you so much for being on the show. I hope you have a best ever day, and we’ll talk to you soon.

From nothing to $47 million in real estate using other people’s money. Edna tells us how she has been able to own so much real estate without investing much of her own money. Hear how she got her start, and what she did along the way that took her business to another level. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!

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TRANSCRIPTION

Joe Fairless: Best Ever listeners, how are you doing? Welcome to the best real estate investing advice ever show. I’m Joe Fairless, and this is the world’s longest-running daily real estate investing podcast. We only talk about the best advice ever, we don’t get into any of that fluffy stuff.

With us today, Edna Keep. How are you doing, Edna?

Edna Keep: I’m doing great, Joe. How are you?

Joe Fairless: I’m doing great, nice to have you on the show. A little bit about Edna – from a single mom at age 16, living in subsidized housing, to a multi-millionaire real estate entrepreneur… She has purchased over 47 million dollars worth of real estate using other people’s money, so we’re gonna stay focused on that, certainly.

She’s based in Saskatchewan, Canada. With that being said, Edna, do you wanna give the Best Ever listeners a little bit more about your background and your current focus?

Edna Keep: Sure. As you already mentioned, my background – I kind of started when I was 16 years old, I had a child and it kind of limited some of my options, like a lot of people said. I was also a C student during school, so I never went on to university or anything like that… So our claim to fame is we’ve been able to purchase 437 doors, or 47 million dollars worth or real estate, using other people’s money. I think that my biggest ability to be able to do that is my background as a financial advisor for 15 years.

Joe Fairless: Okay. Let’s start with the financial advising and then we’ll work our way into the real estate, because it’s related… How did you get into that without a college degree, and then how did you achieve success in that field?

Edna Keep: Well, I actually started studying to be a financial advisor part-time while I was working as an office administrator. Years ago you were able – in my province, not everywhere – to get into studying and even working at it part-time without having a degree. So I studied and then I got my designation, which was certified financial planner, all while I was working at it part-time.

Joe Fairless: And then you mentioned your background with that is what helped you become the real estate investor that you’re at now, the level you’re at now. Can you elaborate on that, how that helped you?

Edna Keep: Sure. We took our training through the Rich Dad education group, which a lot of people do, and it was excellent; we learned so much. And I just started working at it, and we had set a goal of having 50 doors in five years, we thought. $5,000/month, which is kind of what we were led to believe, if we could get $100/month cashflow per property, we could have our $5,000/month goal. We were able to do that in 18 months.

How it came about is people just started asking “How did you do that? We’ve been doing this for three years, we can’t get that.” I realized then that it was my ability to talk to investors that I’d been trained on for 15 years raising capital for mutual funds. And we talked about it a little differently, but really the big thing is getting to understand what your clients are looking for, what your investors need, and I think most people in the real estate world – and even now because I train on it – a lot of people think “Well, why would people give me money to buy real estate?” Well, it’s not just them giving you money; you’re providing a very valuable service, and that is helping them get into real estate without them having to study it for years and years, taking a lot of the risk for them.

In our case, what we do is we partner with our investors. So we bring them in, partner with them, and they’re silent investors, but we know how to make sure that we talk their language. A lot of people think in real estate that if you tell the returns that we’re able to get, that every investor will be all over it, but it’s not true. Investors are more concerned with getting their capital back, they’re concerned about the return OF their principle before they were able the return ON their principle. And it’s like anything, if you start talking 25% returns, it scares people off.

Joe Fairless: Agreed. And with the first 18 months, because it sounds like that’s where you were able to really establish your track record in real estate… You said you were bringing in at least $5,000/month in real estate. Can you elaborate on what you purchased and how that was made up?

Edna Keep: Sure. Our very first purchase was actually a condo. We were quite fearful when we started. We were scared of tenants, and toilets, and just about everything. So when we were going around shopping with our realtor, he took us to some rental properties that actually had just been condominiomized and told us they were for sale… And it just so happened that my oldest daughter had just moved into one of them, so I said to him “Is that one for sale?” He goes, “Yeah”, and I said “Well, I’ll take that one then, because my daughter is a tenant and I know she’ll be a good tenant.” [laughs] So that took a little bit of the fear away.

We ended up buying the one right next door, because Donna had got to know the couple right next to her, and they lived there for 17 years, so we were thinking “Oh my gosh, there we go – we don’t have to worry about two tenants. They lived there for 17 years, they’re not going anywhere. So that was kind of our start, and we got that to happen.

Then our third purchase, which was really where other people’s money started coming in – we were able to talk a lady into leaving the down payment of the property in with the property. We got what was called “cash back at close”, I don’t know if you can do that anymore. Then we paid her an interest rate. So we talked to her two or three different times and really liked the property. She was still working on it; we wanted to make sure we got it, but explaining to her what a vendor take-back was, which is really partial vendor financing, and how it could work to her advantage, it made sense to her, so she invested in her own property, and we still own that property today. We make over $1,000/month on that one property. It’s an uptown duplex. The payment is less than $400/month, I think taxes are $50; all the utilities are separated, so the tenants pay them. So that property alone got us $1,000/month.

When we first started, we were taught if you can get $50 to $100/door, buy it; all day long, buy it if you can do that. So we bought a couple more like that after that, and then we bought a 24-unit. So in one purchase, we basically doubled what we already owned, and that’s how we got to our 50 doors in 18 months.

Joe Fairless: How much were the first two?

Edna Keep: The first two were 129k. You know, it’s funny that a person still remembers… There’s other properties we bought I don’t remember what I’ve paid for them anymore, but those first two – 129k. And you know, in the market that we were in right at that time, Saskatchewan had a really big boom between 2002 and 2010. We bought that in 2007, and within the first year we were able to refinance – or at the end of the first year, because we got a one-year mortgage… We were able to refinance and pull all of our money out of those deals, too.

Joe Fairless: How much did they rent for?

Edna Keep: When we first got them, they offered a rental pool, which was another thing that kind of made sense to us, because we were such newbies and we were scared of being stuck with these all by ourselves… And they were offering $700/month rent. I found out that my daughter was actually paying $740 rent, and I thought “You know what? We’re not gonna go in the rental pool; we’re just gonna collect the $740/month rent ourselves.” But that went up very quickly, and we’ve actually had those units rented out as high as $2,500/month when they were furnished. Right now they’re not furnished just the way that things are going in the market. They’re both two-bedrooms and they rent for — one’s at $1,400 and one’s at $1,200.

Joe Fairless: How do you know if you should furnish or unfurnish a condo?

Edna Keep: You know, that’s a good question. At the time for us it was, again, 100% about the market demand. There was a lot of employees moving into the city; the city was expanding a lot. There was just a need for it. People kept asking “Hey, do you have any furnished units?” and we went “Yeah”, and then we made them furnished. [laughter]

Joe Fairless: Smart. Because clearly, the rent discrepancy is incredibly large with furnished versus unfurnished. Did you buy the furniture or did you rent it?

Edna Keep: We bought, because we found that going on Kijiji and different places like that, we could get some really nice leather furniture, which is what we like to have, because then you don’t have to worry about cleaning them all the time; you just wipe them down.

We found that we could get some really nice leather furniture for way less than if you bought it brand new, so that’s what we did. Then we would buy the beds brand new, because we always thought that that was important… But that’s what we did – we saved ourselves a lot of money. We could maybe furnish a two-bedroom place like that for $5,000.

Joe Fairless: Let’s talk about 47 million dollars worth of real estate… You said it was 437 doors, which is approximately $107,000/door. So those are higher price point units, relative to at least what a lot of people buy. What’s the business plan with a unit that is worth 107k? Are you buying it for roughly that amount, or is there a different business plan in place?

Edna Keep: Well, we’ve been buying now for ten years, so some of them were less and then some of them were more. The very first apartment building we bought, we paid $75,000/door. Right now, the average apartment building in our sweet spot, which is kind of the older buildings, -1968 to 1980 – are selling around 120k to 150k/door right now. So it just kind of shows you what’s happened over the last 10 years.

The prices that I give you – some of them have increased a lot, and some of them we’ve purchased just in the last couple years, and our markets actually dropped a bit in the last couple years, so I just value it at the same price we paid for it. But our business model is we go in and we’re always looking for undervalued buildings that give us an opportunity to force appreciation, either through rent increases or renovating so that the properties are back up to more modern, because a lot of people just let their buildings run down.

Then the other key when we’re working with investor capital is to do that as quickly as possible so we get the investor capital back to them, and then we can use their money all over again.

Joe Fairless: You cash them out after a certain period of time, or are they long-term equity owners with you?

Edna Keep: We give them equity ownership, but we still try to get their money back as quickly as possible, because we don’t share in cashflow until the investors are fully paid out.

Joe Fairless: Got it. And what type of structure do you have in terms of when you enter, just the overall preferred return or ownership split, things like that?

Edna Keep: Our general MO is 60% to us and 40% to the investors. That’ll change up or down, depending on what our hold time is. For example, right now we’re working on one where we know we can get 75% of their principle back at the end of the first year, so we’ve only offered 35% ownership out to the investors. Because even after they get all their money back, they maintain their ownership, their cashflow, their equity appreciation, all that sort of stuff, and then of course, their profits if we sell. So yeah, a lot of it will depend on what our plan is with the building.

Joe Fairless: How do you get 75% equity back after the first year?

Edna Keep: We’re buying in some areas that the builder went in and built some really nice condo units expecting to sell them as condos, and he wasn’t able to sell them. Instead of renting them out — well, he started to rent them out, but he did a terrible job. It was really a case of a builder trying to be a manager; they didn’t know what they were doing, they were just kind of looking to stop the bleeding, so they were moving people in, charging them $800/month rent, brand new buildings, covering all the utilities, and they were just hurting.

So we actually got those buildings under agreement for sale, and what we were able to do with them, because the builder is in trouble and we kind of have a middle man who’s helping out the guy who invested with the builder, helping them out getting them sold… So what we do is we go in and we work on the appreciation of the building. We get it fully-tenanted at good rents. He was renting them at $800-$850/month; we’ve got $1,200-$1,250/month, and they’re paying all their own utilities. Sometimes we’re able to furnish those units, and then increase the rent to $2,300-$2,400/month.

So that’s our sweet spot. We know we can do this so fast it’s unbelievable. But we found out through just talking to the local people that a lot of them didn’t even know they were for rent. They thought they were only for sale, because that’s how they started out being… So once we started marketing properly, it only takes us a year to get everything up and running and smoothly running, and we’ve done it in a few different areas already, with the same builder.

Joe Fairless: So instead of selling the condos, you’re renting them.

Edna Keep: We’re renting them, yeah.

Joe Fairless: But what’s the big liquidation point where you’re able to return 75% of the original money that was invested?

Edna Keep: Well, because of the price that we’re able to buy them for is a lot less value than what we’re able to finance them for, once we get them full. In one case, Joe, there were three rooms rented out of twelve in one of those apartment buildings.

Joe Fairless: Wow. What are you able to buy them for per unit?

Edna Keep: They were built in 2014, so they were almost new, so we paid $127,000/door for them.

Joe Fairless: And what did you rent them for?

Edna Keep: The unfurnished ones go about $1,200-$1,250/month and they’re all two-bedrooms, and then if they’re furnished, it’s anywhere from $2,000 to $2,500, depending on demand.

Joe Fairless: Okay, so you’re renting them – let’s just say it’s unfurnished – for $1,250/month, and you buy them for $127,000… So how do you get the 75% of the money back after year one?

Edna Keep: The very first building that we did this with, when we bought it we paid 1.54m, and it was appraised at finance at 1.9m, so that’s how we get it back so quickly.

Joe Fairless: You’re doing a cash-out refinance.

Edna Keep: Yeah.

Joe Fairless: Got it. That’s what I was missing.

Edna Keep: Well, it’s not exactly a cash-out refinance, because we’re buying it under an agreement for sale, so we buy it at a certain price, we increase the value, and then we actually finance it for the first time with an actual lender. The agreement for sale is still a financing term, it’s almost like a vendor take back; they’re holding all the financing until we can get it to worth the value it should be.

Joe Fairless: With the structure — and I know it varies, it sounds like, for deal-to-deal, depending on what the deal looks like… You do 60/40 in a lot of cases; 60% general partnership (you all), 40% limited partner investors… Do you take an acquisition fee or asset management fees or anything like that?

Edna Keep: We will do a small acquisition fee upfront just to kind of keep everything running, but we pay a property manager to manage; we don’t do the management ourselves. But we don’t take a management fee during the time of the hold… Once the investor is fully paid out, that’s when we get our share of cashflow and all that sort of stuff. In the meantime, we’re kind of building up our sweat equity.

Joe Fairless: Makes sense. And what’s the acquisition fee typically?

Edna Keep: Generally, 1%-2%. When I’m working with my students, what I tell them is “You’ve gotta make it work for you.” At the beginning we didn’t take any acquisition fee because we were making good money and it wasn’t a focus. Our focus was long-term wealth. But here we are, ten years later, the whole long-term wealth is totally taken care of, so now we focus more on giving away higher ownership to our investors and taking the acquisition fee upfront. So I tell everybody “It’s your choice. If you give away more of your deal, you can charge a higher acquisition fee, and if you wanna own more of it, then charge less of an acquisition fee.” Generally, anywhere between 1% and 2%.

Joe Fairless: What is your best real estate investing advice ever?

Edna Keep: Take action. There’s so many people out there that take all the classes, and all the classes, and all the classes, and go to all the events, but they never actually pull the trigger… And you know, you can’t be successful 100% of the time; there’s always gonna be mistakes, but you don’t take them as “Oh my gosh, that was a mistake!” That was a learning opportunity. And just keep moving forward.

So educate yourself – absolutely; work with a mentor if you can, and then take action.

Joe Fairless: You mentioned earlier raising capital for mutual funds helped you understand what people need and how to have conversations with investors… What are some tips that you can give to the Best Ever listeners as it relates to raising funds for their projects?

Edna Keep: First tip – show the investor how they’re gonna get their principal back before you start talking to them about the return on their money. Second tip, don’t talk too high. Sometimes we know we can make 40% a year on our return, but you tell an investor that who’s not familiar with what we do, and they’re gonna automatically say that that’s too high a risk for them. Go ahead and tell them a lower return and go ahead and deliver, because then they’re locked in with you for life.

The other thing is treat those investors like gold, and they will invest with you again and again and again. I see people make the mistake all the time of — if something is not going exactly right, they don’t report, and then people, because they know (they know what’s going on in the market, especially if it’s a market condition, which usually it is), they think you’re sticking the head in the sand and they all of a sudden start thinking all these terrible things are going wrong, when really a lot of times if you’re just staying in contact with them and letting them know what’s going on, then the trust is never broken. But if you ever break that trust, they won’t come back and your whole business model, if it’s predicated on that, it will never work; you’ll spend all your time looking for new investors.

Joe Fairless: What are some specific examples or ways that you treat your investors like gold, other than the most important thing, delivering on the projects? Any tactical things outside of the project that you do with your investors?

Edna Keep: Well, the reporting is a big thing. We report quarterly. Then once a year we get together in a group and we usually have all-day meetings for two or three days and back-to-back we’ll talk with specific investors, report to them live, and then have a dinner together where all the investors can hang out together. Birds of a feather like to flock together, and they like to know that there’s other people out in the world doing the same thing they are, which is really trusting other people with their money, and when you can bring them together like that, we find they really appreciate it.

Edna Keep: Why Do A Students Work For C Students, And B Students Work For The Government, Robert Kiyosaki.

Joe Fairless: Best ever deal you’ve done that you have not mentioned?

Edna Keep: That’s one of my favorites! We bought 144 units all at one time, four apartment buildings, small town, 3,000 population, raised 1.2 million dollars (it was about 40k/door). Two and a half years later we refinanced out, had everybody paid back, ourselves and our partner, got a $75,000 acquisition fee, got our partners paid out in 2,5 years, went on to buy two more buildings. At refi, we each got a $400,000 payday, and we make 10k/month in cashflow.

Joe Fairless: What’s a mistake you’ve made on a transaction we haven’t talked about?

Edna Keep: We’re currently living through one. We bought one building and we paid the same price six months later when we bought another building. It was the same seller, so we had a good experience with him, but we went into a market where we were increasing our rents when we should have been decreasing our rents. We just missed that window, we weren’t paying attention good enough, and we ended up with a whole pile of vacancies all at once, so we ended up putting money into our deal, when we’ve never had to do that before.

Joe Fairless: Are you putting it in along with your investors, or is it just you, or is it just the investors?

Edna Keep: In the ten years we’ve been running, we’ve only ever had two cash calls, and they’ve both been market-related. One with a partner, who’s kind of in control of the money, so I didn’t have a say on it. This one, I own almost 50% of the deal, so I just went, “If I’ve gotta put in 100k, and I’ve gotta put in 50k anyway, I may as well just put in the full 100k, save my reputation with the clients and just ride it out.”

Joe Fairless: What’s the conversation like with investors during that situation?

Edna Keep: I just stay in touch with them all the time, and I’ve told them, I’m not really sure — lots of times we’ll get that building full, and then next thing it starts being vacated again. So our plan is we’re just gonna sell it. We’ve had it for three years, it hasn’t performed for us, so we’re just gonna put it on the block and sell it. We’re not gonna sell it at a loss, we’ll hang on to it because it’s not costing us any money right now, we’re breaking even on it, but we can’t get it to the point where it works like it should work.

Joe Fairless: What’s the best ever way you like to give back?

Edna Keep: I love sharing my knowledge with other people. We’ve been able to build a really nice lifestyle in ten years, and I love sharing that with other people, teaching them what we did, what worked for us. I run a mastermind and I have a couple programs, and I just love seeing the light go on for people going “I did exactly what you told me I could do!”

Joe Fairless: And how can the Best Ever listeners get in touch with you?

Edna Keep: They can reach out to me on my website, and that’s EdnaKeep.com. Or they can e-mail me at Edna@EdnaKeep.com.

Joe Fairless: Edna, thank you for being on the show and talking about your experiences, the lessons learned as you’ve scaled your real estate business and company, the way that you structure deals with investors, the types of fees that are charged, as well as the types of opportunities that you’re working on, and what happens when things don’t go right, the cash calls and how do you approach that from a communication standpoint, as well as tips for raising money for projects for the Best Ever listeners, those three tips – one, show how investors will get their principal back; two – be conservative, and three, treat investors like gold and they will invest again and again and again.

Thanks for being on the show. I hope you have a best ever day, and we’ll talk to you soon.

Edna Keep: You’re most welcome, Joe. Thank you very much for having me.

When the opportunity to buy a piece of land presented itself, AJ took his first step into the world of developing. It was his first development and he was successful with it, profiting about $1.4 million over a 5 year span. Hear exactly how the deal came about, how he was able to envision the sub-division on the land, getting the planning commission to agree to re-zone, and why he decided to also become a new home builder for the development. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!

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TRANSCRIPTION

Joe Fairless: Best Ever listeners, welcome to the best real estate investing advice ever show. I’m Joe Fairless, and this is the world’s longest-running daily real estate investing podcast. We only talk about the best advice ever, we don’t get into any of that fluffy stuff.

We’ve spoken to Barbara Corcoran from Shark Tank, Robert Kiyosaki, author of Rich Dad, Poor Dad, Emmitt Smith (he plays football and he does development), and many others. With us today, AJ Hazzi. How are you doing, AJ?

AJ Hazzi: I’m doing fantastic, thanks.

Joe Fairless: Nice to have you on the show. A little bit about AJ – well, we’ve got the winner of the Kelowna Chamber of Commerce Young Entrepreneur of the Year award. He is the founder and associate broker at the Vantage West Realty Kelowna. His portfolio development property, resort property, rentals, fix and flips and cash flow properties. He’s based in British Columbia, Canada. With that being said, AJ, do you wanna give the Best Ever listeners a little bit more about your background and your current focus?

AJ Hazzi: You’ve got it. Well, I got into the business when I was 19 years old and I became a real estate agent shortly thereafter. This was just going into that boom that we had from 2002 all the way up into 2008. I caught the bug early and was just really feeling that I had found the right business for myself, because I hadn’t experienced any downturns yet, so I was collecting real estate as fast as I could get my hands on it, doing a lot of flips to try to build up my capital.

By 2007, I had about 15 doors and was doing pretty good; then, obviously, the downturn happened and [unintelligible [00:02:21].13] a couple knocks, but weathered the storm pretty good because the bulk of my portfolio was all cashflow stuff. Like I said, I still have my real estate company here, a property management company, and since then I’ve been doing a lot of development stuff, buying some multifamily apartment buildings, that kind of thing.

Joe Fairless: What is your project right now that you’re focused on?

AJ Hazzi: I’ve got a few different projects. We’ve got a small lot subdivision, 13 modern green-built homes near the city center; we’ve also got 14 villas at the golf course [unintelligible [00:02:50].26] and I’ve got some projects downtown, some work/live lofts that we’re building, 10 units down on South Pandosy Village.

Joe Fairless: Why the evolution from buying existing properties to buying dirt and then building the properties?

AJ Hazzi: It wasn’t necessarily that I switched. I still purchase regular residential property. I’m just all about trying to add value anywhere we can add value, and there were certain pockets and certain opportunities that came to me that warranted a good, hard look, and at this stage in my career the access to the capital needed to do these types of things is there, and that’s why we’ve gone that route. But the bread and butter stuff, the multifamily, the duplexes, the houses – all those things are still a focus.

Joe Fairless: It’s one thing to want to add value by identifying an opportunity to build, it’s another to actually execute on it. How did you find the team members to surround yourself with since you hadn’t done it previously?

AJ Hazzi: You just hit the nail on the head there; you need a team, 100%. You can’t do it all. A gentleman that I know worked at a consulting firm, and these guys helped developers put together plans specifically, all the way through project management. So my first project there would be a small lot subdivision. I was foolish enough to think I could project-manage it myself, and I had these guys do the engineering side of it and the consulting side, and then I project-managed it. I would never do that again. I always wanna do a project manager… Give up the 8% and let somebody else do it.

Joe Fairless: What were some specific lessons learned when you did the project management of it? And what development was it?

AJ Hazzi: The subdivision I did up on modern way. One of the things that stands out to me was in negotiating the contract for the underground services. In the proforma they did for me they had sort of given me a number, which was 100k, for putting in the shallow utilities and the deep underground utilities. So me not knowing how it all works, I didn’t negotiate that contract well. I called somebody that I knew, I had them come out, and then in the end there were all these types of loose ends as to who is paying for what in terms of materials and rental of equipment that was needed, all the contingencies… We ran into everything – rock and water and all the things that you can run into, and there were no contingencies built into the contract, of course, because everything was fairly loose, because I didn’t really know how to write an MCD contract at the time. That’s why you hire a project manager.

Joe Fairless: In my mind that’s half experience, but the other half is having an attorney who has experience with those types of contracts and makes the clauses are in there.

AJ Hazzi: For sure. And you can get some boilerplate agreements for sure, and you can hire an attorney to go through it, but I don’t think anything is gonna replace the know-how of somebody who’s managed successfully multiple projects from beginning to completion. That’s invaluable.

Joe Fairless: Let’s hone in on one of these developments. Which one do you wanna pick?

AJ Hazzi: Let’s stay with the one we’re talking about.

Joe Fairless: Okay, what’s the size of it?

AJ Hazzi: 13 lots. It was a three-acre piece that I rezoned and carved into 13 50×120 lots, and we went through and not only created the lots and built the street, but we pioneered Kelowna’s first green street, which was kind of a different thing… There’s no curbs and gutters; we use these little bioswales… It’s a very funky street. But now we’ve actually went and became a new homebuilder as well, and we’re building right through to the end product.

I’ve hung on a little longer to this project that I had initially intended to – I was just gonna sell lots – and then when I saw where the market was going I thought “Why not become a new homebuilder as well and just build the end product?”

Joe Fairless: Okay, so let’s start from the first time that you had the idea to buy the piece of land, the three acres… It wasn’t zoned what it currently is zoned, because you said you went to rezoning; what was it that attracted you to this lot and what was it zoned for when you purchased it?

AJ Hazzi: It was currently zoned agriculturally. There was a house on the property that was totally dilapidated. It was brought to me by a friend of mine, actually. She mentioned that her grandparents had passed on and they were gonna look to settle the estate, and she came to me and asked me if I wanted to sell it on her behalf. They also told me that there was another realtor that was offering them an amount for the property and I essentially said “Yeah, I think I’d be interested in doing something with you guys on this”, and then I called my friend who was the consultant, and him and I signed a sheet of paper, we stood there at the lot, drew where the road would go, and pasted off and figured out whether or not this thing could be curbed into 13 lots. Then we went down to the city and we said “This is what we’re thinking about doing”, and brought in the planning department into the picture at this point, and they all said “Yeah, we’d support that”, and away we went.

Joe Fairless: What’s the key to get support with the planning department on a rezoning?

AJ Hazzi: You wanna understand what their goals and initiatives are and give them something that meets their goals. You can look at the official community plan of any place and you can look at what the initiatives they’re trying to achieve — if they’re trying to densify an area… You wanna go with the grain with the OCT, in my opinion. There are people who wanna reinvent the wheel… My opinion is to find parcels of land and give the city what they wanna see there in the future.

Joe Fairless: And they were looking to make it more dense, correct?

AJ Hazzi: They wanted to increase their tax base in certain areas. That area was future zoned for regular residential homes, so we were just sort of accelerating that. They’re getting frontage improvements and development cost charges… There’s a lot of benefits to the city when development happens, so provided you’re not asking for something that’s outside of their plan, you can usually gain support fairly quick.

Joe Fairless: Did you two go to them and say “We’d like these 13 lots?” or were there more or less initially?

AJ Hazzi: No, we got exactly what we were after?

Joe Fairless: And why did you have 13 lots, 50×120 versus two lots or 26 lots?

AJ Hazzi: It really just comes down to — two lots, the proforma wouldn’t have worked… At the time, we were thinking “Okay, $150,000 a lot (this is going back five years now; they’re over 200k), 13 lots – that’s 1.8 million”, and we figured it was gonna cost about a million too to develop it, and we just sort of did the rough math and figured out what we could pay for the land and still make a decent margin. So two lots wouldn’t have done it, and 13 was the maximum that we would have gotten based on the minimum parcel sizes, so we just went for the max… But it was still inside their by-laws and their rules.

Joe Fairless: The minimum parcel sizes according to that county or that municipality…

AJ Hazzi: Yeah, we were taking them to R1, and we looked at the minimum parcel size for R1 and figured out once you take away the road how many lots you can get.

Joe Fairless: As far as taking away the road, that’s where your buddy was coming into play, right? Because that would be a tough thing for me to pencil in…

AJ Hazzi: Yeah, we’re staring at this thing – it’s covered in trees, there’s a mound in the middle… We were looking at it and he’s picturing the mound gone and the trees gone, and he was telling me “Okay, we’re gonna have this S-bend road that’s gonna go in, it’s gonna have a cul-de-sac right up at the top, right towards that tree off in the distance…” He’s seeing it, because he’s done this before [unintelligible [00:09:46].17] I said “Okay, that sounds good.”

On a piece of a paper, when you draw it, like 300 feet wide by 1,000 feet deep, and I go “Okay, so I’m gonna have about a 700 foot deep road; okay, that’s about seven-tenths of my piece of paper…” You know, you can kind of pencil it out and you can visualize it if you’re looking at a two-dimensional piece of paper, but when you’re standing on the lot – having one of these guys that’s got the experience, who can look at something and say “Okay, this is how it’ll look after we’re bringing these big machines through…”

Joe Fairless: With not having done it before, how do you have a checks and balances between you two to make sure that what he’s saying is accurate? Because everyone makes mistakes.

AJ Hazzi: For sure, and there were mistakes made. The amount of fill that we brought in initially was based on some calculations that he had done, and in the end I ended up having to truck a whole bunch of that fill out… It was a huge trucking cost because the calculations were not exact, but it’s never gonna be perfect; it’s development, you don’t know what you’re gonna run into, but somebody with a good track record, someone that you trust, that’s not going anywhere, they’re not fly-by-night…

I put a lot of faith into the engineering, and in the end it worked out great… But were there some missteps along the way? 100%. Luckily, a good market… We absorbed them.

Joe Fairless: You said you did the first green street in that area… What made you think of doing that and what were the additional steps that needed to be taken in order to pioneer that?

AJ Hazzi: Initially we were trying to figure out how to create a way to get the cost of the road down, and there were some projects in Victoria that had done these curbless, gutterless roads that were narrower, so less asphalt, no curb and sidewalk for it either… So if you’re doing these plantings and these little bioswales — your landscape material is more, but it also added a nice aesthetic, because the properties all appeared to be 15 feet deeper and had these really nice landscape berms in front versus having curb and sidewalk… It’s kind of like a zero edge road.

I saw pictures of it, it’s gorgeous, plus it’s also less expensive to produce, so we said “Okay, we’ve gotta get the city on-site for this.” So we went down and we started talking to different council members and different people from planning and just explained our idea and asked if they would support it. Many were in favor, and when we had enough of them on-site, we decided to put it in front of council and go for it.

Joe Fairless: Do you have pictures of that on your website?

AJ Hazzi: Not on my website, but I can send you a photo.

Joe Fairless: Okay. I’ll give you an e-mail address later after we get done, and then we’ll post that in the show notes link so the Best Ever listeners can check that out.

And then the last question and then we’ll move on because our time is limited – the numbers, that little detail… How much did you acquire it for, what was the all-in price and where are you at now?

AJ Hazzi: We paid 630k for the property back in 2012, and it cost us about 1.3 million dollars to develop it (some cost overruns over the initial thought process), and then we sold the land component for 2.6, so we’re up to 200k per lot now in the land component… So we got 2.6, which was better than our initial proforma. And then on each of the homes we are at a 10% of build cost to the developer as well; we’re building homes in the 600k-800k range for the most part, so there’s a 60k-80k edge for each property as well.

Joe Fairless: Very cool. So you sold the land for 2.6. All-in you’re at about 2 million to get to that point, and then for every house you’re making about 60k-70k… Ish.

AJ Hazzi: Best real estate investing advice ever is to — actually, I looked at the question and there’s sort of three answers to this. Number one, you get what you negotiate. Don’t be afraid to ask for terms other than price. It’s not always about the price. Sometimes you can get very favorable terms. I’ve gotten myself into so many deals that I had no business getting into because I didn’t have the cash, but I gave the person the money and I got the terms that I wanted.

Number two, don’t do what everyone else is doing. Don’t follow the crowd. What everyone’s doing is usually the wrong thing.

Number three, you can protect yourself by always buying for cashflow. All the mistakes that I made were always based on speculating, versus investing in cashflow-producing properties.

So I have multiple things…

Joe Fairless: No, it’s great. One follow-up question on that, and then we’ll go into the Lightning Round. you said you can get better terms and you get what you negotiate… You said you got into deals where you didn’t have any reason to be in the deal, but you just got the right terms. What would be an example of that?

AJ Hazzi: Sure, there’s one recently. We have a commercial property in a very high traffic area here in Kelowna, and the price they wanted for the property was a little rich and it had been sitting on the market for a period of time… I did some investigating, found that these guys owned it nearly for cash and was able to strike up a win/win deal where they vendor-financed the lion’s share of the down payment required to buy this property. My total cash outlay should have been half of a million and it ended up being 150k. I was able to get into a property for essentially 7%-8% down, versus having to put 35%, which is what you would typically have to do on a property like this.

That deal, for example – it’s going to be a great holding property. We’re eventually gonna move our business and our office there, and it would have been too cash-intensive at the time for us had we not negotiated the terms… But most people would never think to ask that, so it’s out on the market for days.

AJ Hazzi: 18-unit apartment building. Bought it for 1.6, put 300k into it, refinanced it for 2.7, got all of our money back plus 200k, and the thing cashflows 10k/month.

Joe Fairless: A mistake that you’ve made on a transaction?

AJ Hazzi: Speculating on condominiums in pre-sales at the end of the market. Lost 300k on two units. Never speculate, that’s the bottom line.

Joe Fairless: What’s the best ever way you like to give back?

AJ Hazzi: I like local charities, local causes, supporting local sports teams… That kind of thing.

Joe Fairless: And how can the Best Ever listeners get in touch with you or your company?

AJ Hazzi: Send me an e-mail: info@ajhazzi.com.

Joe Fairless: AJ, thanks for being on the show. Thanks for talking through the anatomy of a ground-up development deal, the challenges… 13-lot, three-acre piece that was rezoned, and your whole process that you went from start to finish, with the numbers, as well as your best ever advice, a 1-2-3 punch: you get what you negotiate, don’t follow the crowd and protect yourself by always buying for cashflow; never, never speculate.

AJ, thanks for being on the show. I hope you have a Best Ever day, and we’ll talk to you soon.

From Africa to Canada, she can buy and teach her methods across continents! After starting with buy & hold properties, Thembi realized she needed money sooner than they could provide. When she began with Rent to Own, she never looked back!

Thembi Bheka Real Estate Background: -Founder of Real Estate Real Riches, an education platform for individuals in Africa to invest in real estate -CEO and Real estate investor at Infinity Housing Solutions -She came to Canada from Zimbabwe with $5 in her pocket -Mentor with Kelowna Community Resources, a government organization to help immigrants -Based in British Columbia, Canada -Say hi to her at http://realestaterealriches.com/ -Best Ever Book: The One Thing

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Joe Fairless: Best Ever listeners, how are you doing? Welcome to the best real estate investing advice ever show. I’m Joe Fairless, and this is the world’s longest-running daily real estate investing podcast. We only talk about the best advice ever, we don’t get into any fluff.

With us today – Thembi Bheka. How are you doing, Thembi?

Thembi Bheka: I’m doing great! Thank you, Joe, for having me today.

Joe Fairless: My pleasure, nice to have you on the show. A little bit about Thembi – she is the founder of Real Estate Real Riches, which is an education platform for individuals in Africa to invest in real estate. She came to Canada, where she currently resides, from Zimbabwe, with five bucks in the pocket. She is the CEO and a real estate investor at Infinity Housing Solutions, as well. With that being said, do you wanna give the Best Ever listeners a little bit more about your background and your current focus?

Thembi Bheka: Yes. Hello, Best Ever listeners. I hope this will be the best ever show for you. I came to Canada, as you said, in 2001; I trained as a registered nurse. However, during that time I realized that I wanted some financial freedom and I also wanted some time to spend with my children. I started investing in real estate in 2008.

When I started, I started as buy and hold, basically buying properties for the long term, and I realized that wasn’t going to give me what I needed quite fast… So I transitioned into what they call rent to own and agreements for sale.

Joe Fairless: Are you doing rents to own now?

Thembi Bheka: Yes, I do mainly rent to own and agreements for sale, which I believe in the U.S. is known as seller financing.

Joe Fairless: What is the program that you have? Do you have something with people who live in Zimbabwe to help invest in real estate?

Thembi Bheka: Yes. So what I have is a training platform where I help people in Africa to find out how to get properties with no money down, using seller financing, which is also agreements for sale, as I said… Because what I found [unintelligible [00:04:22].14] and people would just stay forever until they’re 70 years old before they even own their first home, trying to save money. And most of the banks, even if they are banks, do not qualify easily as you would anywhere else in the world.

That’s when I realized that there was a need, there was that gap where we could bridge the financing gap between individuals who are selling and individuals who need to buy a home.

Joe Fairless: Let’s talk about the last agreements for sale/seller financing deal that you did. Can you tell us the number son it?

Thembi Bheka: Yes, it’s actually what I’m working on right now; it’s three properties, all with one seller. This is in Canada. The seller needs 182k/property for a townhouse, and he wants really no money down. All he wants me to pay him is this one, which is listed with an agent, and he wants agent fees for that one, which is going to be about 20k.

It rents for about $1,400 in the area. Currently, the mortgage is $600/month and condo fees are about $300, so I will be cash-flowing probably about $400/month, and I’m not putting any of my money.

Joe Fairless: So you’ve got a seller who’s got three properties, each of them $182,000, and he’s agreed to sell them to you for no money down… What type of financing terms do you give him?

Thembi Bheka: I’m taking over the mortgage from the bank. He has a mortgage already at the bank, so basically I am getting in and taking over the mortgage. They agreed to extend the mortgage for another three years, so we have a five-year term with that mortgage.

So I’ve been taking over the mortgage, the property taxes, the interest and the insurance, and just getting into this property.

Joe Fairless: And why is this a good deal for him?

Thembi Bheka: Because he just wants to get out of the property. He’s tired of dealing with tenants.

Joe Fairless: But why wouldn’t he sell them traditionally? Because there is no equity in the deal?

Thembi Bheka: There is equity… There’s about 25k in each property, but once you pay the realtor fees and you pay all these legal fees and you pay the cancellation fees for your mortgage, he really was gonna walk out with nothing. So this is a good benefit for him… At least he doesn’t have to go through the pain of trying to sell it. And the market is not great right now in Edmonton – this is a property in Edmonton. The market is not that great for him to sell.

It could stay for six months without finding a buyer right now… So this is a fast way for him to let the property go.

Joe Fairless: And how do you give him the confidence that you will pay the mortgage in particular, so that he doesn’t get foreclosed on and hurt his credit?

Thembi Bheka: Our company is a reputable company; we’ve been doing this for a long time, so that also gives us the confidence and it gives anybody the confidence. But even then, we do have an agreement with the lawyer.

We don’t just sign this in the backyard, we sign it in front of the lawyer. We have an agreement which obliges me to do this; if I don’t do this, he could go after me and sue me.

Joe Fairless: Okay. And that is for all three properties?

Thembi Bheka: For all the three properties, yes.

Joe Fairless: How did you come across him?

Thembi Bheka: He called me from my website. I have a website which I haven’t advertised forever, and I just got a call a couple of weeks ago… He actually said, “I only have one property and I need to sell it because I’m tired of managing the tenants and it’s empty right now. Then as we got to speak, as I got to know him more, I found out that he actually has three, and then he was willing to let me take the three as a package.

Joe Fairless: What is his situation where he doesn’t want to just continue to sit on these properties? What’s the life circumstance?

Thembi Bheka: He’s tired. As an investor sometimes – especially if you buy without the right fundamentals, it is easy to get tired, especially if you don’t have the right training of what kind of tenants to put into your property… You get all these tenants who come and trash the place. Then you clean it up and then another tenant comes and trashes the place and you clean it up…

Without a good knowledge and without a basic foundation of where you’re going to go, it’s easy to [unintelligible [00:08:42].25] and it’s easy to get tired. That’s why you need a solid foundation in real estate and solid education, to be able to screen your tenants properly.

Probably what has happened with him is he’s just had all these tenants coming, trashing the place and leaving. This property is newly renovated; he just renovated them and he didn’t put anyone in them. He probably just decided “I do not want to deal with a tenant anymore. I am just exhausted with this and I want out.”

Thembi Bheka: It’s the first property I ever bought, in 2008. I bought it because it was pretty. I didn’t look at the numbers, and I didn’t screen the tenants. I didn’t know anything about screening the tenants. I just got it and said, “Oh yeah, I’ve got a property and somebody’s looking for a place to rent. You’re in!”

What happened is those tenants stayed with me for five years, and I never did any checks. I didn’t know that you’re supposed to go check the property. After five years I went in, because they started not paying rent, and I kept giving them longer and longer periods to extend… I think it was after six months of not paying rent that I went in and the place was a mess.

Joe Fairless: How so?

Thembi Bheka: It’s funny, because when I went in, Joe, I went in with a potential renter. I advertised it to say, “Oh, I have another property if you wanna come and see…”, before even looking at this property. First of all, you come by the door, there’s garbage everywhere. Garbage! I’m like, “Oh, this is embarrassing. I should clean up the garbage real quick before these other potential tenants come in.” As soon as I finish cleaning up the garbage, the potential tenants come in, and I open the door, and this smell… I can never get rid of it even up to now… It hits me! I can smell it just talking about it! It just hits me in the face.

I didn’t know what it was, but it turns out that when you have many cats and they just pee in the house for five years, it really gets it in a mess. The smell was so bad… We had to rip out everything. So I learned a lot…

Joe Fairless: Yeah, I’ve been in a similar situation when we were doing due diligence on an apartment community and there was a hoarder who had just stuff stacked to the ceiling in some cases, and not only did they have cat pee and poop everywhere, but they had dead cats, two of them, that had been decomposing in the closet. It was just a terrible, horrific scene. And the smell – holy moly…

The inspector would not go in there until he got a hazmat suit. He literally was in a marshmallow suit with a visor and the head gear and everything whenever he went in to inspect it.

Thembi Bheka: Wow… That’s probably your best deal.

Joe Fairless: [laughs] We did end up buying it, but they had to get it fixed before we ended up closing. So this 2008 pretty property – how much did you buy it for?

Thembi Bheka: 285k.

Joe Fairless: And where did you end up with it?

Thembi Bheka: I still own it up to now, and I’ll tell you what it’s worth – 240k.

Joe Fairless: Yeah, it happens sometimes, huh?

Thembi Bheka: Yeah… And I have put in at least 10k in that property. As I said, I just bought because I had [unintelligible [00:12:14].02] real estate you can be successful, and I just didn’t think of the fundamentals.

Joe Fairless: How do you run the numbers now when you look at a deal?

Thembi Bheka: I calculate basically what the mortgage is going to be, and everything… When I calculate my mortgage, I put in a buffer because we know that interest rates go up and down, right? Right now our interest rate is kind of very low, about 2.5%.

Joe Fairless: 2.5%?! Oh, man… Lucky you!

Thembi Bheka: Yes. So when I calculate a property, I don’t calculate with 2.5%, I calculate with 5%. I put in a buffer for that, because I know they’ll go up. Then I add in the property management, which is something I never used to do before. So I add in the property management, the vacancy rate, which I calculate for one month’s rent (which is 8% vacancy rate), and maintenance fees, because the property needs to be maintained, and I usually put 10% for maintenance fees.

So I add in all those as a buffer… Not that it’s gonna happen, but just in case it happens, I have some money in the bank.

Joe Fairless: With the interest rates being as low as they are, and then you’re projecting 5% — why are you projecting 5%, unless you’re doing a variable versus a fixed interest rate on your properties?

Thembi Bheka: I try to go variable as much as I can.

Joe Fairless: Oh, really? Why?

Thembi Bheka: Because long-term research has shown that when you go variable, at the end of the day – usually not just in a year, but over 25 years – you actually make more money than when you go fixed. And I also like the fact that I don’t have to be tied down too if I have to get rid of the mortgage or cancel a property.

Joe Fairless: I remember interviewing someone – I forget who it was, but he talked about how it does make sense to do variable interest rates in certain scenarios, and it’s interesting that you’re doing it in every scenario when you can.

Thembi Bheka: Especially right now, with the way the economy is. The rate is so low, it makes sense to do variable. But having said that, I do have a [unintelligible [00:14:21].14] creeping up, sometimes I could lock in, but usually, I try to go variable.

Joe Fairless: Do you find that you’re at a competitive disadvantage sometimes when you’re making offers on properties and you’re running the numbers in this way where you’re doubling the interest rate, and others probably are not running the numbers that way, therefore they might be able to pay more?

Thembi Bheka: Yes, I do, but it makes me sleep at night. For me the most important thing is having sleep at night and spending time with my children. What I found, especially with the first property where I just assumed things were going to stay constant [unintelligible [00:14:59].21] fees will never go up, I found myself being stressed, not even being able to pay a property manager because I don’t even have the money to pay a property manager upfront. So I’d rather have a big buffer, than have less.

Joe Fairless: What is your best real estate investing advice ever?

Thembi Bheka: Start with your why. In any transaction, when you have to do with a seller or you have to do with a buyer, just find out what is their big WHY. Why do they want to sell this property? Instead of focusing on the financial aspect, you’d be surprised how much you can [unintelligible [00:15:30].24] when you focus on the why.

Joe Fairless: Can you tell us a story of when you have focused on the why and it has helped the transaction?

Thembi Bheka: This property of land – 10-acre land – which I made an offer on and it was 450k… The realtor had listed this land and he kept saying “Oh, the seller wants the money, the seller wants the money.” Then I asked if I could meet with the seller, and I spoke to the seller and I asked him “So what do you need the money for?” He says, “I just wanna put it in the bank account.” Then I explained to him that “You do realize that when you take this money upfront and you put it in the bank account, you’re going to [unintelligible [00:16:07].01] capital gains, and also you’re going to be getting very little interest.”

What happened is I gave him options to say, “Well, maybe what I could do is I could give you just a little bit upfront, and then pay you over a certain number of years, that way you don’t have to pay that much in capital gains.” That seller was so happy and I ended up getting the deal.

Joe Fairless: Beautiful! Thank you for sharing that. That should be in everyone’s tool kit that’s for sure. Regardless of what type of deal we’re working on, we should always have that conversation.

Thembi Bheka: I guess the three deals I just spoke about – the agreement for sale deal.

Joe Fairless: What’s a mistake that you haven’t mentioned so far that you’ve made on a deal that comes to mind?

Thembi Bheka: Using emotions when dealing with tenants.

Joe Fairless: Best ever way you like to give back?

Thembi Bheka: Teaching other people to invest in real estate.

Joe Fairless: And where can the Best Ever listeners get in touch with you?

Thembi Bheka: RealEstateRealRiches.com.

Joe Fairless: That will be in the show notes page, so Best Ever listeners, you can click on the link and check out her website.

Thembi, thank you so much for being on the show and sharing your experience starting from scratch, coming from Zimbabwe to Canada… You started out as a registered nurse, and then decided that you wanted to focus more on long-term wealth and spending your time how you wanna spend it.

Then the properties – the three properties that you’re working on right now, with the seller who is just tired and wants to get away from the deals, and the value exchange that each of you are providing… More so he’s providing to you than you’re providing to him, but I think if we were to ask him, he would say you’re providing a lot of value too, because it’s a peace of mind.

Also, talking about the agreement with lawyers that you have in place so that he could come after you if you don’t adhere to what you said you would do; that’s an important part, I’m glad that you mentioned that… Because when people hear that story, initially at least, I think “Well, what’s the catch?” So it is drafted up and there are some repercussions if you don’t live up to what you will be doing. Also, the 2008 pretty property that stunk really bad after five years of tenants living there, lessons learned and then how you run the numbers now with the interest rate padding, the vacancy, the maintenance fees… And start with the WHY questions that you want to know for every transaction – Why are they selling? And you gave the wonderful story of how you were able to work yourself into a deal with a little upfront and money over a period of time, versus more money upfront.

Thanks so much for being on the show. I hope you have a best ever day, and we’ll talk to you soon.

Have you ever asked yourself what elements make up a successful real estate investor? This episode is about to unveil what exactly makes an individual excellent in whatever they do, especially in real estate!

– President and founder of Frame of Mind Coaching & JournalEngine™ Software 1995-2005 President of Upward Motion that unveiled the Real Estate Simulator, web based assessment tool – Recognized as one of North America’s Top 50 most influential women in real estate – Author, speaker, and mother of five – Based in Toronto, Canada – Say hi to her at www.frameofmindcoaching.com/ – Best Ever Book: Ask and It is Given

Joe Fairless: Best Ever listeners, welcome to the best real estate investing advice ever show. I’m Joe Fairless and this is the world’s longest-running daily real estate investing podcast. We only talk about the best advice ever, we don’t get into any fluff. With us today, Kim Ades. How are you doing, Kim?

Kim Ades: I’m great, how are you?

Joe Fairless: I am doing great as well, nice to have you on the show. A little bit about Kim – she is the president and founder of Frame Of Mind Coaching and Journal Engine software. She has been recognized as one of North America’s top 50 most influential women in real estate. She is an author, speaker and mother of one, two, three, four, five kids, and she’s based in Toronto, Canada. With that being said, Kim, do you wanna give the Best Ever listeners a little bit more about your background and what you’re focused on?

Kim Ades: Sure. Right now I coach people, I coach the highly-driven population, those people who typically have four things in common – number one is that they are highly driven and they have incredible goals that they wanna reach. Number two is they’re good people, they wanna make a positive difference in the world, they tend to get involved in charity communities, they donate, those kinds of things. Number three is they are big livers, so they wanna have the best of everything: they wanna have a nice home, they wanna have a nice car, they want to travel to nice places, they want to have great health, great relationships etc. And number four is they’re frustrated, overwhelmed, stressed, exhausted and find themselves bumping up against the same problems over and over again. That’s what I do, I work with those people.

Joe Fairless: Sweet. Well, let’s talk about your real estate background, and perhaps that will bring to life the coaching stuff in more context. Tell us about your real estate investments from beginning to where you’re at now.

Kim Ades: Real estate investments are very simple – I used to own property, as a landlord. That was years ago when I was first married in my first round of marriage, when I was 20. I started young, and over time I’ve still just been purchasing my own properties, without mortgage etc. But my involvement in real estate is not really so much focused on my real estate investment; I’m not anything extraordinary more than any other average person, but I was really interested in what is it that makes a real estate professional better than any other real estate professional. That’s how I got involved in the real estate industry – I studied what makes a top performer. That’s where my career brought me to really getting involved in the real estate career and going out to all the conferences and events and learning what drives real estate professionals.

Joe Fairless: Alright. I certainly want to get the answer to that question, but I do wanna back up a little bit… You said you have been buying properties without mortgage – why without mortgages?

Kim Ades: I’m not a big fan of debt. I prefer to purchase and be clean and clear, and then whatever it is that I do with those properties in terms of rental income or my homes over the years, it just has felt a lot better. I love living debt-free, it’s a good way for me to live without any additional stress or headaches.

Joe Fairless: Okay. And you’re an active real estate investor now?

Kim Ades: Yes, absolutely.

Joe Fairless: And are you investing in Toronto or other areas?

Kim Ades: Primarily locally.

Joe Fairless: What’s the last deal you did? Not necessarily when you did it, but just what are the numbers on it?

Kim Ades: It’s a little bit personal; it involves some players, so I’d rather not get into the details, but I’m involved in some family investments etc.

Joe Fairless: Okay. You told me before we started interviewing, you’re like “The harder the interview, the better”, so I’m bringing it.

Joe Fairless: Every interview I ask the guest “What’s the last deal you did? Tell us the numbers on it”, and 99% of the time they tell me. How about a deal that wasn’t the last one, but maybe a previous one, just to give us the numbers so we have an idea of what you’re buying.

Kim Ades: A while ago I bought investment property in Ottawa; they were a single vendor of apartments, and at the time we had mortgages, but low mortgages, so they were covering the mortgages. Then we sold them for about a 20% profit. When you own a few over time, it kind of adds up.

Joe Fairless: Alright, I can tell by your short responses when I ask those questions that’s not a territory that you wanna focus on… So I do wanna know – and I’m sure the Best Ever listeners are curious – you mentioned you were studying what makes a real estate professional better than other real estate professionals, you went to conferences… What were the insights that you got from that investigation?

Kim Ades: Well, normally you would think that a really great real estate professional is one who has really strong real estate related skills – maybe they are good at building rapport, maybe they are good at closing the deal, maybe they’re good at identifying different options available on both the buyer and the seller side of the equation… Well, what we discovered is that all of that is very important, but it’s not critical. Really what’s critical is if a person has a high degree of emotional resilience. What does that mean? As a real estate professional, if you lose a deal, what do you do when that happens? And even as an investor, what do you when you lose a deal? What do you do when a deal goes south? What do you do when you’re actually losing money on a deal? What do you do? How do you bounce back from that? And the person who has the ability to bounce back with greater speed and agility, that’s the person who’s going to be much more likely to succeed.

Very often when we interview possible real estate professionals to represent us, we wanna know about their wins; my recommendation is don’t only ask about their wins, ask about their losses and what they did with those losses. That’s interesting – people are uncomfortable with that? That’s okay. But the losses are where we really learn how a person has the ability to take a bad situation and turn it into an advantage.

Joe Fairless: On that note, let’s talk about a deal for you that didn’t go according to plan, how did you handle it? Can you tell us a story of it?

Kim Ades: Absolutely, I can tell you a personal situation; it wasn’t real estate oriented, but I mentioned to you that I used to own property when I was young, with my first husband (I’m remarried now). One of the things that happened to us is we owned a company together, and as our marriage unfolded, I ended up selling my shares. I didn’t know much about tax law or anything like that, and I made a huge error in the way that I sold my company, and a couple of years after the sale I ended up getting a call from our government (CRA) letting me know that I owed them $300,000 in taxes… So not quite the real estate story you wanted, but still, definitely an investment that kind of blew up on me, and it was a scary time. But luckily, I had the money, so I just paid it off and right after that I just really scaled back. I stopped going to get my hair done at the hairdresser’s, I learned to color it myself. I just took care of things a little bit differently and stopped living very frivolously, and just kind of scaled back until I recalibrated and kind of felt more comfortable again, but it took me a couple of good years until I got back on my feet after that.

Joe Fairless: I know we have some Canadian listeners; in fact, it’s about 7% of the audience that lives in Canada – what was a specific mistake that you made, so that they don’t make it?

Kim Ades: There’s a way that you sell your company where you get a $500,000 tax exemption from the sale of a company, and I didn’t sell it that way, so I didn’t get that benefit, so all of it was taxable. I didn’t know, and because I didn’t pay that on that amount for a few years after that, not only did I incur a tax bill, I also incurred a bill on the money that wasn’t paid.

Joe Fairless: Alright, so your recommendation would be to speak to an accountant before you do that?

Kim Ades: Yeah, speak to an accountant, and even a tax lawyer would be really helpful. Don’t just sell your shares… Understand what you’re getting into and make sure you’re taking the right steps from a legal standpoint and understand what the tax implications are. Taxes are a big deal.

Joe Fairless: Taxes are our number one expense.

Kim Ades: Yeah. The other thing I would recommend on the business side of the equation – we’ve been audited here, and I was so happy about how squeaky clean our books were professionally speaking, that the revenue agent – she took our books for close to nine months and just sat on them. We would kind of review and say “Hey, what’s up? What’s happening? Can we get an update?” and finally she came back and said “I don’t see anything wrong here, it’s all clean.” There was not a single adjustment that had to be made… So really, keep clean books – that’s another recommendation.

Joe Fairless: Congratulations on that, by the way, the squeaky clean part; that’s a challenge of most investors and just most entrepreneurs in general.

Kim Ades: For us, there’s two things: pay your bills fast, and make sure to be on top of your collections.

Joe Fairless: I wanna go back to what you said – you said the difference between real estate professionals and the best of the best real estate professionals is a person who has a high degree of emotional resilience. That reminds me, just simple stuff – it’s gonna be a little ridiculous, but I’m on a softball team, and when someone has an error in the field, I can tell the people on my team… I don’t even have to know them and I can tell which ones are successful in business and which ones are not, because the ones who are not successful, they moan, they complain and they let the error that someone else made just upset them for about seven or eight more pitches, whereas the people who are successful in business, they’re like “Okay, that happened. We can’t do anything about it now, so let’s just move on to the next pitch”, and it’s such a metaphor for what you’ve just said, emotional resilience, because we have to just be resilient enough – as you said in your $300,000 example – to just take your lumps, get it done and then move on.

Kim Ades: Yeah, you have to move on, and the faster you move on, the better. I will also say that if you can do something with your experience, turn it into a positive, somehow then not only are you just moving on, you’re leveraging it, you’re winning from it. You’re not just losing and learning a tough lesson, you’re actually winning.

Joe Fairless: So know what just happened, identify what you can do to mitigate that from happening again, and find an empowering meaning within that learning experience.

Kim Ades: Yeah, and again, not just find an empowering meaning, but use it to your advantage somehow. The idea is there’s always a silver lining, but a lot of people aren’t used to looking for that; a lot of people just assume it just simply doesn’t exist, and I will tell you that that’s not true.

I’ll give you a perfect example, it’s a business example… Years ago, we used to own this software company, and we went to our first ever trade show and FedEx didn’t deliver our booth. We were a little bit upset, because it was our first trade show, so how do you show up to a trade show and have a booth with no actual booth? There was nothing there. So what we did is we went to Walgreens in the states and we bought a Bristol board and some markers and some tape and we made a sign; the sign says “FedEx didn’t deliver our booth, so now we’re forced to give you 50% off just to attract your attention.” Man, there were line-ups at that booth…

Normally, when you go to a trade show, you go just to show up and say “Hey, we’re here”, but we didn’t do just that. We sold product right there on the floor, and that was unheard of in that scenario. So don’t only just take your blow, say “How can we turn this into something good?”

Joe Fairless: Boy, I think you’re gonna find a lot more booths that say “FedEx didn’t deliver our booth. We’re offering 50% off” after this episode airs. [laughs] I think everyone’s gonna conveniently forget their booths and just knock on FedEx and UPS, those poor companies, after hearing this. That’s a great idea.

Kim Ades: Right. And if you do and it works, please send me an e-mail and let me know.

Joe Fairless: [laughs] Take some pictures. Kim, what is your best advice ever for real estate investors?

Kim Ades: Best advice ever is don’t be afraid to walk away from a deal, that’s number one… And really, don’t be afraid to walk away from anything, because there’s another opportunity right around the corner. Don’t think this is the only thing and the only one, don’t get attached to any particular outcome. Now, that concept is related to all of the coaching that we do, whether it’s a particular outcome in a relationship, in a business arrangement, if it’s a particular outcome with a real estate investment or a product that you’re building – whatever it is, don’t get attached. When you remove your attachment, all of a sudden you’re able to think of grander solutions, you’re able to solve problems with greater ease, and you’re able to see new opportunities as they arise, instead of really keeping your eyes peeled on this one idea. That would be my greatest piece of advice.

Joe Fairless: How do you know that there’s another opportunity around the corner?

Kim Ades: There are so many of them you can’t see them. You don’t have the capacity to see all the opportunities that are coming at you every minute of every day… So it’s not “How do I know?”, it’s “How do you open yourself up to what’s coming at you?” That’s really the question. There’s an unlimited amount of opportunities, we just don’t have the capacity to see them and embrace them.

Joe Fairless: And how do you have someone embrace that philosophy? Because it’s still not a “Okay, I got it”, it’s still “Believe me, there is more opportunity!” How do you know “Well, you can’t see them, but there’s more.” How do you have someone embrace that?

Kim Ades: How do we teach people to look at things that way? Number one is we look at their history. So there’s a philosophy; the philosophy is this – we always look for evidence to support our beliefs, so when we believe there’s just one opportunity and if we blow it, lives get blown out of the window, then that’s the belief we live by and that becomes true for us. If we believe that there are lots of opportunities, then they just show up. But one of the things we do is we help someone look backwards and we say “Look at all the things that have happened and let’s look at how they showed up.” We’ll start to show people that they have been involved in a huge number of opportunities over time, but they never thought of it quite that way.

We start to show them the evidence of the opportunities in their own lives up until this point. And opportunities can look like “Hey, where did you meet your spouse?” It could look like “How did you end up buying that car?” It could end up like, “How did you meet your best friend?” or “How did you start this business?” or “How did you buy this house?” or “How were you introduced to this particular idea?” or “How did you get to this dentist who really did a great job for you?” and you’ll notice that oddly enough a lot of things are lined up for you perfectly and serve you with a million opportunities. We just don’t think of it that way.

Joe Fairless: Yeah, unless we’re forced to look back and then reverse engineer how we got to that point. That’s really interesting.

Kim Ades: Right? The other thing is look at how so many awesome things happen to you all the time, every single day, that we just take for granted. Like this morning – did you have a hot shower? You probably did, and you don’t kind of stop and take notice. Or if you go into a building and you go up in the elevator, do you know how much planning went into that elevator for you, how many people were involved in creating the building, creating the structure that allowed you to get into that elevator that day? We don’t think of getting into an elevator as an opportunity, but it’s pretty massive.

Joe Fairless: Great perspective, that’s for sure. One thing that I do with my fiancée before every meal is we mention something that we’re grateful for, so that it triggers that in our mind; it would be something like a hot shower, or an elevator, although I haven’t specifically mentioned those two things. Now I’ve got two more things to add to my list.

Kim Ades: I can give you an endless list of lists.

Joe Fairless: Yeah, I hear ya. Are you ready for the Best Ever Lightning round?

Joe Fairless: Best ever personal growth experience and what you learned from it?

Kim Ades: Coaching. I learned that I am responsible for the way I feel and everything that happens to me.

Joe Fairless: Probably my number one takeaway from attending Unleash The Power Within with Tony Robbins – exactly what you just said. We are in control of the emotions that we have; it’s very empowering to think of it that way.

Kim Ades: It’s a game changer.

Joe Fairless: What’s the best ever deal you’ve done?

Kim Ades: Best ever deal I’ve done… This house, the house I live in.

Joe Fairless: Why?

Kim Ades: I was supposed to buy it, and then it got pulled out from under us and we ended up buying it afterwards at a lower price than our original offer.

Joe Fairless: Did you have to wait a couple of years, or was it in bankruptcy or foreclosure?

Kim Ades: No, it was a matter of maybe a month or so… A month or so later, with a new agent. Things had changed, and we found a bit of a loophole that allowed us to get us a lower price.

Joe Fairless: What’s the loophole?

Kim Ades: The loophole was the size of our balcony. Our balcony is oversized, and apparently because it’s oversized, it had to be ripped down, so we asked them to pay for the tear down theoretically, and they took that amount off the top of the price.

Joe Fairless: Do you still have your balcony?

Kim Ades: Yes, I do.

Joe Fairless: [laughs] What’s the best ever way you like to give back?

Kim Ades: Coaching. It’s just what I do.

Joe Fairless: What’s the biggest mistake you’ve made on a particular deal?

Kim Ades: Yeah, I mentioned that one. The biggest mistake was not knowing tax law.

Joe Fairless: Where can the Best Ever listeners get in touch with you?

Kim Ades: Best place is FrameOfMindCoaching.com. There’s all kinds of information there, there’s audios, there’s blogs, there’s testimonials, and best of all, there’s an assessment that you could take that will allow you to assess your frame of mind right here, right now.

Joe Fairless: Kim, thank you so much for being on the show. Thanks for talking about and educating us on what makes a real estate professional better than other real estate professionals, that is if the person has a high degree of emotional resilience. We have to learn from it, find an empowering meaning and use it to our advantage somehow. You gave the perfect example of the FedEx delivery – it didn’t come to your trade show booth, so you have a sign on the booth that said “We’re offering 50% discount to attract attention because we didn’t get our booth delivered by FedEx”, as well as if we are second-guessing if there are other opportunities, then let’s be honest with ourselves and take a look at how we got to this point, how we have accomplished certain things that we have in our lives, whether it’s a significant other or some sort of business thing, or as you said, maybe how did you get your car, or your best friend… And then look at those through reverse engineering as opportunities.

Thanks so much for being on the show. I hope you have a best ever weekend, and we’ll talk to you soon!

– CEO of Casemore and Co Inc.; A global consulting firm for CEO’s and businesses – Author of “Operational Empowerment: Collaborate, Innovate, and Engage to Beat the Competition” – In past two decades worked with organizations such as Pepsi Co, CN Rail, Tim Hortons and Spectra Energy – Published over 1000 articles, booklets and resources on improving individual & organizational performance – Based in Ontario, Canada – Say hi to him at www.casemoreandco.com

Joe Fairless: Best Ever listeners, welcome to the best real estate investing advice ever show. I’m Joe Fairless and this is the world’s longest-running daily real estate investing podcast. We only talk about the best advice ever, we don’t get into any fluff.

I hope you’re having a best ever weekend. Because it is Sunday, we’ve got a special segment for you – Skillset Sunday. By the end of our conversation today with our Best Ever guest, you will know how to develop your team better than how perhaps you’re currently developing your team, and creating your team better than how you’re currently creating your team.

With us today we’ve got someone who has 17 years of developing his own team, and he currently helps entrepreneurs develop their own team. How are you doing, Shawn Casemore?

Shawn Casemore: Hey, Joe. Thanks a lot for having me.

Joe Fairless: My pleasure, and nice to have you on the show. A little bit more about Shawn – he is the CEO of Casemore & Co., a global consulting firm for CEOs and businesses. He’s the author of “Operational Empowerment: Collaborate, Innovate and Engage to Beat the Competition.” He’s published over 1,000 articles on improving individual and organizational performance. Based in Ontario, Canada. With that being said, Shawn, do you wanna give the Best Ever listeners a little bit more about your background and your focus just to add some context to our conversation?

Shawn Casemore: I’ll try and stay as focused as possible on your audience, Joe. My experience was about 17 years in different corporate environments, different companies, different [unintelligible [00:03:40].21] different sectors, and I always had a team, since the age of 23. I’ve had unionized, non-union, two people working in remote locations, up to 95 people in one location… That experience of over 17 years lead me to wanting to launch my own business, and what I’ve specialized in and what I’ve kind of found that my specialty is is in helping entrepreneurs/business owners understand how they can get more out of their team. And when we say ‘team’, I realize some of your listeners may have not had employees, or maybe some that just have a team of folks that support them to run their own business from a marketing standpoint… So what we’ll talk about today and some of the tips I’ll share really addresses your own employees, if you have a team in that regard, or if you have multiple teams in your business, but also if your team is not so much full-time employees as it is contractors that support you, these tips, techniques and ideas will be applicable.

Joe Fairless: Yeah, I undersold what we’re gonna learn… It’s not just about team development as you said, it’s how to get more out of our team – even better. So it directly applies to the bottom line. How do we wanna structure this conversation, how do you wanna lead it off?

Shawn Casemore: I guess we could start with this – if you could give me some of the challenges you think your listeners face (one or two challenges), what I can do is probably tie that back to their team and how to overcome those challenges.

Joe Fairless: Okay, cool. One would be people who are looking for deals – so it could be a fix and flipper… Someone who buys a house, fixes it up and flips it to someone else. Their challenge might be either finding enough deals or finding the right contracting partners, so the people who are doing all the work. Those would be a couple challenges I could think that they have.

Shawn Casemore: Let’s start there. So in this case let’s look at the team. I’ll address both of these, but we’ll start with the contractors. The team – if you’re gonna be successful in fixing and/or flipping, obviously you need a team of different contractors, although you might have a general contractor. You need that team to support you, so they need to be able to drop everything and come running when you need them, although in their own business they might have to sustain other business and other customers, which means they’re not always there for you. The cost is always a factor – the more you pay them, the less profit you have. And the last thing would be when you look at your contractor as a team, you’re trying to get on the same page. This is your bread and butter; to them it might just be another job. So how do you get more to that relationship?

Step one – when you think about any contract at your business, and by contract I don’t specifically mean a general contract, but any way that you pay an hourly or by job basis, you have to realize those folks have their businesses and have their own priorities, and therefore you need to somehow make your business their priority. I’ll say that again, you have to make your business their priority. Now, the logical ways that we’ve seen this done, even if you watch some of the shows on TV, is that the investor goes out and they beat up on the contractor, they yell and scream and rant and rave and threaten to pull business… That looks good for TV and that’s why that’s on TV, but in reality that’s not the way it works.

So you have to figure “How can I make things in my business just as important as their business?” You can do that obviously through leverage – the amount of business you give them – but more importantly you wanna make them feel like they’re a part of something. For example, when you’re going out to take a look at a property, you bring your contractor – we’re talking like a general contractor – with you. Do you involve them in the decision-making? Do you actually give them the chance to take a look at situations and provide potential solutions, and when they do, do you thank them for it and you take some of their advice?

I see it in myself, I’ve been involved in real estate now for probably only about 5-6 years as kind of a side venture, something I enjoy, and really to build that team when I’m kind of a solo investor, it becomes trying to ensure that other people who support me, although they’re not an employee, they feel like this is also their business. That comes back to building a relationship, which includes things like trust, honesty… And you’ll find that a lot of contractors will be very receptive to that, because everybody else treats them like crap, so they’re happy to work with those who actually treat them like a human being, respect their ideas and viewpoints, and treat them as if they’re part of your business.

Joe Fairless: I love that. Involving them… One thing that I do with my team – I’m not a fix and flipper, but I have teams for my company, and I always make sure that I mention it’s not MY podcast, it’s OUR podcast. I have that mentality because it truly is ours; it’s the team, it’s not just me, and I think that has a psychological benefit as well. What do you think?

Shawn Casemore: Absolutely, it does. It really comes back to — I think in business sometimes we end up running over those who support us, and maybe inadvertently, because we’re so busy, we’re so fixated on the next deal, the next opportunity, cash flow… Those things absorb, I’m sure, much of the time of your listeners. But the problem is in doing that many of us, because we’re so focused on those things (they call it stress), we can come off as jerks, and then that inadvertently can be then thrust upon those who support us. And notice, we’re talking about a contractor here, but if you had employees on your team, the same thing can happen; you’re focused on cash flow, you’re focused on sales, you’re focused on the next deal, but that stress then when you turn to answer some questions of your employee or your contractor comes out that you’re a little bit of a jerk… And then what do they think of you? They think you’re a jerk, so are they gonna stand behind you, are they gonna be there when you really need them? The answer is no, and you’re probably gonna wonder “Hey, why is that? I’ve given them a solid job and I’m paying them for years, I’ve been trying to include them as a team…” So it becomes very difficult for the entrepreneur or the investor in this case to have a couple different mindsets going on. Number one – the business mindset, which is “the next deal, cash flow, profitability”, but also the separate mindset that is “Hey, in order to be successful, I can’t do this alone. I need people, be it employees or contractors or otherwise”, and people are receptive to other people. People are receptive of being treated fairly, being treated honestly. In fact, I can actually warm people up a little bit if I start to maybe go that extra mile or if I drop off a coffee. When I’m [unintelligible [00:10:09].04] I always try to grab some coffee for the guys.

Here’s a funny situation… I had a contractor and his team working last summer on this property that I had, and it was a really hot summer day, which believe it or not, despite the snow [unintelligible [00:10:20].25] I’m coming in, I’m rushing in, I’ve got a few minutes to stop by and see how it’s going and move on to the next thing, and I think “You know what? If it were me, here it is Friday at [3:30]; I’m hoping they’re gonna stay and finish the job”, so I stop and grab some beer. I brought it back and I said, “Hey guys, I hope this is okay.” I can tell you the contractor that lead that job became my friend immediately. Instead of bringing stuff to my house after house, dropping off stuff… “Here, I forgot to give you this. Here’s a deal on that…” Suddenly, he’s my best friend, and all I did was take a moment to step out of my agenda, my schedule, and start to think about them as people and realize “Well, what would I want if I were them? It’s a hot Friday afternoon, I’d want some beer”, right? It’s that mindset.

Entrepreneurs and investors need to focus on two mindsets: the business mindset and mode, but there’s also the people mindset and mode, which oft times is very similar to how you would deal with your customers. We’re suggesting you deal with contractors, employees with a similar tone and ideas that you would with your customers.

Joe Fairless: I imagine that the principles that you teach and work with your clients on through your consulting firm are similar principles that we as real estate investors can employ, so what framework do you use with your clients, when you’re working with them to get the most out of their team?

Shawn Casemore: Typically, what I would do is — every team is different, every organization is different. For example, I was just speaking with a client this morning; we are working with kind of a subset of a small group of people in the organization. We identified some very minor changes to something, and this morning we sent that out to the broader team before it went live and said, “Hey, give us your feedback. What do you think?” and interestingly enough, out of about 15-20 additional people this went to, two were just hands-down “This is crap, this is not gonna work.”

Joe Fairless: Fire them. Nah, I’m kidding… [laughter]

Shawn Casemore: Well yeah, but [unintelligible [00:12:17].14] they’re senior people, they’ve been around for a while. So the fun thing was leading up to this, everybody in the subgroups I was working with said “Oh, there’s gonna be some barriers, there’s gonna be some problems”, and I said “What will they be?” “Oh, can’t tell you.” Well, it became very clear what they are – some senior people that realistically are just at a point in their career where they don’t wanna change.

Now, the one mindset is, as you suggested, Joe, fire them, get rid of them; they’re not gonna accept change, I don’t have time for this. But on the flipside you’ve gotta realize they’ve got – how many decades of experience here? This may be a matter of “I can invest a little more time with them to convince them”, but also on the flipside, “What am I maybe missing here?” So rather than let my desire say “Hey, screw them, let’s just move forward with this. This isn’t necessary”, I’ve gotta invest a little bit of extra time.

When you go back to “What’s the framework?”, step one is understanding that everybody on a team is an individual; they’ve got their own life experiences, which includes their personal experiences, their own work experience, their own ideas, and everybody wants to share those ideas and experiences. Some people will speak up and slap you upside the head with it, and the next person might not say “Boo!”, but everybody does have that information. So if you wanna create a stronger team and a better business, you need to really understand that everybody’s an individual, and deal with them on an individual basis to get the most out of them, to get these ideas that help them feel like they’re part of something. When you create an environment where that happens, powerful things begin to happen, people begin to feel happy at work, which we all know means they’re actually more productive, they start to share ideas more frequently, which as an entrepreneur we can’t think of everything.

So it really starts as simply as understanding that everybody is an individual, has their own ideas and viewpoints. Some of them might not be valid because they don’t have all the background that I do or others do, but a lot of people just wanna be heard. If you can listen to them and start to capitalize on some of those ideas, you’ll build a very, very strong team.

Joe Fairless: How do you treat everyone as an individual and hear their ideas, while still scaling a company?

Shawn Casemore: Here’s how we’ve handled it in the past – we put in layers of management. So your team starts to grow and you say “Well, I need a general manager to manage this team” or “I need a supervisor for this group.” And that’s okay, but the problem is when we hire those people, we usually pick the best person. You’ve heard that old saying, you get the top sales person and you make them manager of the sales department, now you’ve got two problems – number one, you’ve [unintelligible [00:14:39].03] your best sales person, and number two, that person may not be a good people person.

If you’re gonna put these layers in, you wanna pick leaders who are people-first, who are good with people… Because I can train any skill, I don’t care what it is. It might take me time, but I can train a skill, I can develop somebody’s skills. I can’t make everybody good with people. So when we’re adding these layers, that’s what you wanna consider, that’s step one.

But on the flipside, let’s say you’re not gonna have layers. You’re still small enough that you can scale for a while before you put leaders into place… You need to calendarize some time where you’re only dealing with your people, whether it be contractors or otherwise. This isn’t a stop by a property and just “Hey, how’s it going? What’s new?” If you’re gonna do it that way, schedule time to spend time with people. Make a point and realize it that as a business owner, as an entrepreneur, the people that are in this business are as important if not more so than me, because they’re making it happen. I may be putting the deals together and shaking hands, but they deliver… So I really have to invest some time.

I tell leaders all the time: “Stick it in your calendar every Friday to spend the afternoon or the morning going around and just talking to people.” You might not hit everybody every Friday, but make a point of doing that, and what you’ll find is you’re able to better understand everybody as an individual, therefore when you’re positioning things, ideas, viewpoints, asking questions, you can position it from a perspective that they personally appreciate.

Joe Fairless: Let’s say we have a remote business… A lot of real estate investors have remote team members. Let’s say we follow your advice on scheduling time with our remote team members; we just jumped on the call, they say “Hi”, we say “Hey, how’s it going?”, we do the initial pleasantries… How do I approach that call? What questions do I ask?

Shawn Casemore: Well, step one, don’t have a call. If you look at the technology we’re using today, Joe, Zoom, Skype – there’s all these tools out here today that allow for face-to-face interaction. So preference number on – and you can use mobile for it – I have a face-to-face interaction. Because think about any call you’re ever on; if somebody calls you, what are you typically doing?

Joe Fairless: I’m picking my nose right now while you’re talking.

Shawn Casemore: You write notes, you’re answering e-mails, you’re trying to type quietly so nobody hears… So if you get them face-to-face, you’ve got their attention, even if it’s for a short span, and you get a better feel for where their head’s at; are they really interested in this or not? It goes back to the old saying, body language is the most powerful communication tool we have, and yet in today’s highly technologically driven world we’re missing that piece. We’re wondering, “Why do I have to send 32 e-mails to get the point across?” Well, why didn’t you go see them? That would have saved you a lot of time.

So if you’ve got a remote team – and I have the same in my business today – I schedule time (if they have Skype, or Zoom, or something) where we get face-to-face. Maybe it’s only once a month, maybe it’s once a week, depending on how important that person is to the business and how frequently you can interact. And I can change that. If we start at once a month and that’s not enough, I pull it up to once every two weeks, and I set this [unintelligible [00:17:33].25] with the individual that “Look, I think it’s important that we stay connected. I prefer face-to-face, because it allows for both of us just to have a more meaningful conversation” and if they push back and say “I don’t want that, because I’d rather be at home in my PJ’s right now”, tell them “Just put a better shirt on and let’s go face-to-face. Give me the chance to give it a try first.” Face-to-face is key with those remote people to ensuring that you’re having a valuable dialogue.

Joe Fairless: Okay, alright. We’re seeing them electronically, via Skype or something, or we’re in person. Now what questions do we ask? How do we structure that conversation?

Shawn Casemore: It depends on their role. You start with pleasantries; that might sound so simple and stupid, right? You say “Hey, how’s it going? What’s new?” but the change that I would suggest a lot of entrepreneurs make when they ask that question is to actually pause and wait for an answer… Rather than just “Hey, how are things? Great! Anyways, here’s what I need from you…” – that’s typically how that conversation goes. So we’ve got in our mind going into this, “Hey, I’m spending 10-15 minutes, maybe 20, just trying to find out what’s going on in this person’s life”, so if they focus heavily on business, I’m gonna go there with them, but I’ll ask them how are things going personally. If they focus heavily on the personal side of things, I’m gonna go “Great! How are things going in your job? What’s going on right now?”

So it’s just that time to have a dialogue, and there doesn’t have to be a fixed agenda. The point is if you’re an effective leader and you’re dealing with people just like you would with a customer, you’re gonna change your approach. Think about this again from a customer standpoint – if you’ve got a customer that’s pounding his or her fist on the table, demanding answers, do you sit back and crack a smile and light up a cigar? Probably not, right? You’ll get them the answers quickly. Same if you have an employee that’s direct like that, I’m gonna respond directly. Or if I’ve got somebody who’s more thought-provoking and they wanna sit back and analyze things, I’m gonna mimic the same, because that’s how I break through that barrier of the fact that “Hey, I’m human just like you. Yeah, I’m your boss, but I appreciate you, I care about your ideas and viewpoints” and that starts to open up people to providing new ideas, being more creative and more supportive to my business.

Joe Fairless: So far what I’ve written down for takeaways for how to get the most out of our team is 1) make your business their priority by going the extra mile, making them feel like they are part of something, and/or involving them in the decision-making process. Another is don’t be a jerk – pretty simple. A third is to get feedback for what you might be missing. When you use that example of sending it out to 15 or so people, a couple of people who have been there for a while said “What’s going on? I don’t like this” – well, what might you be missing? And the fourth is everyone on the team is an individual and they want to share their experiences, and scheduling time with them in person as much as possible. I don’t think it’s “as much as possible”… I think as much as it’s required to get you your sweet spot probably, and then if you can’t do in-person, then do it via Skype or Zoom or something like that.

Anything else that we haven’t talked about that you wanna mention, that will help the Best Ever listeners get the most out of their team?

Shawn Casemore: I guess the last point I would bring up Joe is the idea that, again, if you realize that everybody’s an individual, you have to realize that recognizing people, thanking them has to also be individual. For example, let’s say you’ve got a few people on your team and you have a great year and you do the cliché send them all a jacket or give them all a ball cap. That’s fine, but if you’ve ever received the jacket from maybe a business you were working in at some point, some people love that jacket, some people would rather have the cash, some people didn’t like the color, some of them got their names spelled wrong… So when you look at recognition or just thanking people, that also has to be individual, so sometimes that’s a matter of with you, Joe, because we’ve got a great rapport and we get along well, think very similar, you may be a similar personality as me – I know I can pick up the phone and give you a call, and say “Hey, Joe, I really appreciate your hard work in that” and I send you a gift certificate for Dunkin’ Donuts, or something.

Somebody else, I’m gonna see them on the site, so I’ll go over and give them a pat on the back. Somebody else, I’ll drop some beer off to him. If you really think about that recognition and thanking people is also individual, because that’s the only way I can make sure it’s valuable to the person. If you do that, again, you’re gonna find people are more appreciative and more supportive of you and your business.

Joe Fairless: I know you’re gonna say it depends on the individual, but I still would like for you to tell a story of one of the best ways that you’ve seen or done personally the individual thank you approach.

Shawn Casemore: Personally, my experience has been — and everybody disagrees with me on this, or pushes back… But my personal experience has just been walking around, going to see people and just thanking them. Now, I’m not gonna say the same thing every time; I’m gonna change it up based on the situation. But hands down, most people just want a thank you.

Again, that thank you will vary depending on the individual. If it’s a shy person, I’m not gonna go over and pull them up in front of the team and make a big announcement, because that’s gonna piss them off. I’m gonna go talk to them at their place at work, their desk, or get on Skype with them and say, “Look, you put a lot of effort into that – notice I’m being specific about my thank you – and it was done on time, and that’s the best we’ve ever done… Just wanna tell you, I really appreciate that. I know you put some extra hours in to get this done.”

It’s that personalization that is absolutely key, but again, it’s just that face-to-face recognition. Most people, if you give them money, they just want more. That’s something I can use once in a while, but taking time out of my day when most people recognize as an entrepreneur you’re busy — so if you take time in your day to specifically go see somebody and say “I’ve got nothing else on my agenda, I just wanted to stop by and say thank you”, people are probably gonna be shocked at first, and after a while come to desire that kind of feedback, which again is a good thing, because you can build on that. You can start to take that to “I’m thanking you, and by the way, what other ideas do you have? How might we replicate this success again?” You just start with thanking them on a one-on-one basis.

Joe Fairless: Shawn, thank you for being on the show and talking about how to ultimately get the most out of our team, but it’s deeper than that… It’s also how to have a more enjoyable relationship with our employees, so that we all achieve larger things together. Because when we’re implementing the tactics that you mentioned – that I recapped already, other than that last piece of thanking the individual – then we will enjoy ourselves much more than if we are doing the opposite or not doing it at all, I promise you that. No one likes being a jerk, I don’t think, and asking ourselves better questions like “What else might I be missing?” and having conversations as much as is needed to reach that sweet spot of efficiency with our team members, in person or where we’re seeing them – that’s something I don’t do, and I will test it out and see the change in the results.

I have a daily call with my team at 8 A.M., Monday through Friday. They’re all local, but we don’t do Skype, we just get on the phone call, and I don’t see some of them very often in person. So I’m gonna implement that.

And then also making your business their priority – when we step outside of ourselves and we step in someone else’s shoes and we make it their priority, then ultimately our priorities are gonna be addressed and then some. I love your example of just paying $20-$25 for a case of beer to the contractors and all of a sudden guaranteed you’re making your money back that you invested in that case of beer and then some. Plus, you just feel better. I mean, come on, we’re on the journey together, why not enjoy each other’s company?

So thanks so much for being on the show… Where can the Best Ever listeners get in touch with you?

Shawn Casemore: Again, thanks Joe for having me. The best place to find me is on the web, www.shawncasemore.com. You’ll find a lot of tips, resources, everything there about how to further develop your team. Also, you can google my name and you’ll find me on virtually every social media channel out there.

Joe Fairless: Excellent. Well, Shawn, thanks for being on the show. I hope you have a best ever weekend, and we’ll talk to you soon.

He bought homes not only out of state, he bought outside of his country! Today’s guest is a Canadian who fancies the long-term buy-and-hold wealth strategy. Be sure to understand his equation for purchasing a home and why he decided to purchase outside of his own country.

– Associate Realtor at The Real Estate Company/Mortgage Specialist at the Mortgage Resource Company – Currently owns and manages 27 doors with rental incomes of just over 32K per month. – Started investing in 1992 with $12,500 and has grown portfolio to over 4 million dollars – Based in Calgary, Canada – Say hi to him at www.Romboughproperties.com – Best Ever Book: How to Win Friends and Influence People

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You find the deals. We’ll fund them. Yes, it’s that simple. Fund That Flip is an online lender that provides fast and affordable capital to real estate investors. We make funding your projects easy so you can focus on what you do best…rehabilitating homes.

Lease options are all about matchmaking, and it’s on a whole new level when you have nothing out of your own pocket. Our guest is able to create passive cash flow streams and massive pay days, even a hefty consideration on the tenant buyer’s option deposit, and he does so with a high energy team that supports the tenant buyer in purchasing the property within the term. Hear it and learn!

– President of the Canadian Association of Rent-to-Own Professionals – By beginning of 2017, he has raised over $17,000,000 of private capital for real estate projects – Best known for the tenant-first rent-to-own strategy, and uses other strategies to help his joint venture partners – Nominated for the Canadian Real Estate Wealth Awards Joint Venturer of the Year 2016 – One of the youngest Canadians to ever retire – Based in Alberta, Canada – Say hi to him at http://www.lionopportunities.com – Best Ever Book: The Art of Raising Capital by Darrin Weeks

When we mean high, we are not talking about the herb! Our guest has an incredibly positive attitude and has proven to be honest even in the toughest times. Hear how he made it difficult decision and what he’s doing now to stay ahead of the curb during this rough recession in Canada.

– Real Estate Agent at Realty Executives Leading – One of the top realtors in Spruce Grove – Professional skateboarder – Based in Alberta, Canada – Say hi to him at www.haroldsellshomes.ca – Best Ever Book: The Bible

It’s time to take all your plagues that keep you from growing your business in real estate and throw them out the window! One of our favorites, Trevor McGregor, is here to share what five roadblocks stop real estate investors from growing. He also has five keys that you can apply today to turn your operations up a notch.

– A Master Coach with the Tony Robbins Group – has done over 10,000 hours of coaching – Based in Vancouver, Canada – Real estate investor who has done fix and flips, buy and holds and wholesaling – Visit him at www.trevormcgregor.com

Marketing and event expert Louie La Vella is here to share his techniques to creating the hype you need for your next open house! He shares his success on branding, pre-selling, and staging. This is an episode you will not want to miss if you’re serious about creating a large following!

Today’s guest had a high-profile listing appointment but no means of transportation to get there. After getting over the frustration of not having a vehicle at the time, he shares the one question that allowed him to begin seeking solutions instead of wallowing in his fear of not making it. This is an impressive episode!